money. i mean, the reality is it's not going to cost more money. i mean, it's going to cost -- i think about $3 billion to finance all publicly -- all federal elections. and we can pay for that by cutting any one of dozens of loopholes. so it doesn't need a cost the taxpayer any more money.the ende individual taxpayer in the country will be doing better. it will end all those subsidies that are going to the rich corporations.

caller: i agree. we have another kennedy run in in massachusetts. i have one question. any mention economic justices, i will work it up. i probably lean more toward the tea party than the occupied people. worked on the lake. back in the day, i assume they made ice from -- ice crane from cows. you mentioned economic justin. i could not afford it.

it was by far the highest priced the screen. -- ice cream. guest: that is the major problem and one of the big reasons it costs more money is there is a lot of -- a lot more air and cream and higher quality ingredients all around. i wish it were not as expensive. host: the last call for ben cohen comes from michigan, john on our republican line. host: i apologize -- caller: good morning. host: i apologize, the line is

so bad it is not worth our time. again, ben cohen, what is your website? guest: it is movementresourcegroup.org, and hopefully if you want to support the occupy movement, you can donate. host: ben cohen we appreciate you coming on and talking with our viewers, thank you. >> in about 20 minutes, president obama holds the 100 fund-raiser of his reelection campaign. he actually has four event in new york city tonight. they are expected to raise about $5 million. one was a fund-raising dinner

at 8:20 eastern. you can watch it live. >> john gainers says republican leaders had a positive bating with president obama yesterday discussing many issues including jobs and energy. he spoke with reporters for about 10 minutes. >> good morning. american families and small businesses continue to struggle.

they fill the impact of prices. that is why it is critical that both parties find common ground to help our struggling economy. we have seen some positive economic news lately. but it is being overshadowed for many families by soaring energy costs that are increasing the costs of living. we must work together to find both energy and economic solutions. i was encouraged during the state of the union when the president came out and said he was for an all of the above energy strategy. an approach that republicans have championed for years. utilizing america's vast energy resources can help increase supply and have a positive effect on energy costs and create millions of good paying jobs at the same time. it is a win-win for everyone. i will repeat that we had a very positive wanted the white house yesterday.

we discussed a number of areas where i believe there is common ground between our two parties, particularly on jobs and on energy. i would like to think it is a sign that some of the bipartisan bills will be passed here in the house and maybe take it up soon by the democrats over in the senate. the president's job council said as a nation we need to take advantage of all of our national resources to spur economic growth, create jobs, and reduce our country's dependence on foreign oil. that is exactly the approach that we have taken here in the house. for example, the president's job council said that we should allow for more access to oil, natural gas, and coal opportunities on federal lands. the house has passed legislation to require the interior secretary to issue leases in new offshore areas containing the most oil and natural gas reserves and conduct lease sales that were delayed or canceled by the administration.

the house also passed legislation to require the interior secretary, in most cases, to decide whether to issue a permit within 30 days after receiving an application for the permit, ending a permitting delay that has been put in place by this administration. the president's job council said where sources have been uncovered, federal, state, and local authorities should encourage the safe and responsible extraction of shale natural gas. the house has passed legislation that would set clear rules for the development of u.s. oil shale resources and promote shale technology research and development.

the president's job council said we should make more areas available for renewable energy development and streamline the permitting process. the house has passed legislation removing government barriers to the development of clean renewable energy projects on federal lands by streamlining and simplifying government regulations and ensuring that we still have environmental reviews. the president's job council said policies facilitate the safe, thoughtful, and timely development of pipeline transmission and distribution projects are necessary, to facilitate the delivery of america's fuel. you all know the house has passed legislation to require the approval of the keystone xl pipeline, a project that even former president clinton has said that we should embrace right now. at our lunch yesterday, we offer to work with the president on these measures, and we had a productive discussion about it. he agreed to take a look at some of them. the all of the above approach is not just good for energy prices. it can also create new, high- paying american jobs. i think the american people support our approach, and i am hold that we can see real progress in the coming weeks and months.

lastly, i was also encouraged by the president and his embrace of the jobs act, which has been spearheaded by leader cantor, which was introduced earlier this week. it will make it easier for small businesses to grow and hire more workers. i am looking forward to strong bipartisan vote in the house next week on this bill. >> on the blunt amendment, do you worry creating similar legislation in the house would create a backlash against republicans by women voters? >> i think the american people are concerned about the government's infringement on religious liberty. the senate will have its vote later today, and the house will decide how we will proceed. >> can you give us an update on the transportation bill? in your view, what went wrong, and what will bring it up, and what will it look like? >> the first thing you need to know about the transportation

bill is that for the first time in the 21 years that i have been here, we have a transportation bill with no earmarks. the last highway bill we had had 6371 earmarks in it. secondly, when you look at the fact that we're trying to fund 116 federal government programs of the highway trust fund, you can understand why we have not had sufficient resources to actually repair our roads and bridges. because we're finding all kinds of beautification projects. ballparks in the past, parking garages. there's a long list of nonsense that was there. when you begin to reform this process, take away the earmarks, consolidate the number of programs, and try to focus it, you can imagine you are breaking an awful lot of china. it has been difficult.

we are continuing to work with the chairmen and the committee and our members to buy the pathway forward. >> on gas prices, there has been a coordinated effort in messaging this week, especially among some of your republican colleagues, saying that the president's policies are designed and intended to drive up energy prices, to drive up gas prices did you believe that? >> secretary has said that his goal is to have higher energy prices. that is what a lot of our members are queuing off of. i am not sure that the president believes that higher energy prices are what he wants. after my discussion with him yesterday, adding he would prefer to see lower gas prices. at least through election day. >> nancy pelosi just mentioned that using the strategic petroleum reserve would be a way to lower gas prices. a huge supporter of that idea? >> it did not appear to me yesterday, but the president believes that that is true. just releasing it without coordination with our allies around the world, all it does is shift where the supply is coming from.

it did not appear to me that the president believed that using that would have any meaningful attack on gas prices. >> you said the senate bill was inadequate because it was -- the highway bill, now you're writing -- >> there is no writing up a bill. >> 18 months is not in the cards? >> apparently, our members do not think too highly of it. i would only look at it as a fallback measure. we need to do this the right way. you know, we have had five years, six year reauthorization of the highway bill. it is important for the state and for those who want to invest in this area to have a broad horizon so they know where we're going.

and a five-year bill is the best way to get there. whether we can achieve that given the differences, we will see. >> back on the contraception issue. you said you want to see what happens in the senate before forging ahead in the house. is there debate in your conference as to what is appropriate? we have talked to a number of members in your conference to say this is the wrong thing to do and we want this changed. is there not even unanimity on how to approach contraception? >> i think it's important for us to win this issue. our government, for 220 years, has respected their religious views of the american people. and for all of this time, there has been an exception for those churches and other groups to protect the religious beliefs that they believe in. and that is being violated here. i have been trying to take this out of the political realm and get it into a position where we can continue to protect the american people's right to their own religious views.

and there are a lot of ways to do that. there is one over in the senate. we have a couple ideas in the house. it is a matter of how we proceed. >> what do you mean? >> it is important that we continue to protect their religious beliefs of the american people from their government. and the government encroaching in this arena has not happened in 220 years, and it should not happen in this case. >> you think the house should present legislation that would exempt all businesses from the contraception requirement? >> the issue is protecting the conscience clause and other religious beliefs of the american people from

encroachment from their government. >> [inaudible] how do you feel about that group arguing that he is not conservative? >> well, i do not know much about what the club for growth is doing. but chairman upton has done a marvelous job and led the effort to repeal obamacare, led the effort to expose solyndra. he has his conservative voting record. frankly, i think he's done a marvelous job on behalf of republicans in the house. >> first you say that government should be in the contraception issue, but the

second, it is that you're working on ways in the house and the senate to get government out of the conversation. how can government get out at the conversation if there is conversation in government about the contraception issue? >> it is about protecting americans' religious beliefs. we have done it for 220 years. it is part of our constitution. and the government is moving in a direction that would force some americans to violate their religious beliefs. this is wrong, and we want to stop it. >> you said you want to take the issue out of the political arena, and you said you want to work on areas to find common ground. how do you work with democrats on an issue that is so decisive? >> i believe in standing up for the constitution and standing up for people to practice their faith as they like. i am returning to get a bipartisan agreement and to solve this problem. >> thank you. [captioning performed by national captioning institute]

[captions copyright national cable satellite corp. 2012] >> in just a few minutes, president obama holds the 100 fund-raisers' since he began his reelection campaign last april. he has for a dent in york city tonight. we will be taking you live for his second stop a dinner for 80 people at the abc kitchen restaurant, a $35,000 a plate dinner. >> today, that nancy pelosi says speculators are responsible for higher gas prices and that congress must work to lower a oil and gas prices.

she spoke to reporters for 15 minutes. >> good morning, my heart goes out to the families in the midwest and we extend our support. and i want to mention it has affected families in illinois and missouri and tennessee. thoughts and prayers are with those families. we are in budget season. hearings will be beginning soon and here we are, republican ideas that have already been rejected by the american people and increased costs for seniors, medicare actuary said the republican proposal which shift costs to seniors.

another version of the medicare should go on the vine. according to latest poll from kaiser family foundation, 70% of americans including 53% of americans see the republican plan for what it is, a shift of cost to seniors. budget season and also driving season, spring and summer come upon us. we must work to lower gas prices. american products and businesses to be competitive globally for our make it in america, to succeed and thrive and prevail, we must lower the cost of energy in making our products and we advocate american energy, american jobs. what's happening about the price at the pump is very interesting. supply is going up, demand is going down and the price is going up. it is very contradictory and

how do you explain that? you explain it by recognizing that republicans are protecting wall street speculators responsible for driving up the pain at the pump. republicans blame inadequate u.s. production and hear them say if only we could drill more in the u.s. the facts are these since president obama became president of the united states, oil rigs have increased four times, quadrupled since he became president, domestic oil drilling. in addition to that, if you take all of our rigs, gas and oil, they are more than all of the rest of the world combined.

did you know that? four times, quadrupled since the president became president, gas and oil, more than the rest of the world combined. so we are exploiting domestic supply. and inferences to be drawn from what the republicans are saying that more oil drilling, it's simply not true. supply is up, demand is down, you would think the price would come down. enter speculation. not the healthy speculation that is normal to the marketplace but a speculation that can add 20% to a barrel of oil. the american people have to know this because this has happened before, but what has made matters worse at this time is as the speculators are wreaking havoc on the price of oil and gasoline at the pump in our standing in the way of enforcement of the dodd-frank

provisions in the bill which address speculation. even taking the initiative to address speculation to court as we sit here. so it is -- it's part of their republican response, protect big oil subsidies to the tune of tens of billions of dollars, triple the commodity commission for policing wall street price manipulation. according to commissioners, speculation, not the lack of production, raises the price at the pump by 22%. i want to commend to the american people to the success of reducing demand by their conservation efforts. for the first time since 1949, the u.s. has -- is a net exporter of oil products.

for the first time since 1949. so, production is up, exporting oil products is up, american people are conserving, speculation has intervened and therefore we do not see the commensurate lowering of price at the pump and we must fight that, whether it's by shining a bright light on what is happening with speculators. that's been a problem. we have talked about it before. as i said, added to that is the republican obstruction to the cftc doing its job. ok. this is all part of their reining the american dream. we are building ladders for people who want to play by the rules, work hard, take responsibility to succeed.

we want to do this through promotion of small business and entrepreneurship in our country. we have plenty of work to do. but for us to make it in america, we have to, again, lower the cost of energy in our country and that is exactly what the president is striving to do. we talked about the budget season. we talked about the driving season. and now it's women's history month in march and republicans are kicking off women's history month by bringing the blunt amendment to the floor in the united states senate. instead of talking about jobs, which is what the american people expect and deserve us to

be doing, what they sent us here to do, we have moved onto the blunt amendment, a blunt sweeping overreach into women's health, part of the republican'' agenda of disrespecting women's health issues and allowing employers to cut basic health services for women like contraception, prenatal and cervical cancer screenings and preventive health reform benefiting 20 million women just in that prevention services piece. they are focused on the extreme blunt amendment rather than vigorous job creation and now even have found out that their obstruction includes not being able to bring a transportation bill to the floor, which is one of the biggest job creators that we have. >> here we are. they continue their assault on women's health.

they continued it an assault on the consumers of siding with speculators rather than consumers. i will take questions. >> since you are talking about march been women's history month and talking about this assault on women, we talked to a number of catholic women who see this differently. you are a catholic woman. what is the divide in the catholic church? how do you view this in your faith compared to the way they are interpreting this? >> first of all, this is a women's health issue. the anecdote is not data. i do not know who you spoke to. the records show that 90% of catholic women have used birth control. so this is a women's health issue. a matter of conscience for each woman, her husband, her family, and her god to make their own

decision. as a catholic, i support the right of a woman to make that decision. but this is about women's health. we talked about mammograms, cervical and ovarian cancer screenings, those kinds of things. the need for birth control and contraception is not just about reproduction. it is on the larger sense about the forward picture of women's health. >> the jobs act, the package of small business changes yesterday, expressing that the president seems supportive, at least to most of it. what do you think about the jobs that? you think democrats will support it? >> i think four of those bills have passed. this is the path of least resistance.

one of them is a democratic bill which they have renamed the republican bill. but that is ok, just as long as the american people are well- served by it. but that is not a substitute. that is just a preliminary to what we have to do with the big jobs bill about transportation. we are in a public-private partnership to rebuild america, to promote commerce, to move people, to increase broadband -- all of the things that you would do in the infrastructure bill. this little package is, i think, viewed positively. it is not a substitute for the jobs bill that we need. >> do you see any areas of common ground with republicans on energy policy or something to bring them gas prices? >> we can address the issue of speculation. >> that is not the issue. i am saying something of common ground.

>> they should be able to find common ground with the american people want that. they're getting completely zapped in that regard. one thing that is interesting is that the republicans keep saying if only we could drill more. we are drilling more, four times more than when the president took office. more rigs of oil and gas combined than the rest of the world combined. we have to stipulate through facts what can be done. some refer to cutting edge technologies for energy, as well as addressing the renewable issue. some of that is longer term in the short term -- in the short term, to send a clear message to the speculators. my personal favorite is for two

reasons. first of all, you do not put the oil in the spro, and if you replace it when oil is at a lower cost, you can do the right thing by the cost of the taxpayer. also, every time oil has been diverted or taken from it, one or the other or both, price at the pump has gone down. even if you do not subscribe to that, if it least it's a question to the speculators that you might do this. that is something that i think should be prominently on the table that we would be willing to use so that the price can come down and speculator can be put off. >> [unintelligible] >> ok, ok. you know how i am about the people who are always here all the time.

>> you get back to the lunch yesterday, republicans came out of that with encouragement. speaker boehner said he was encouraged. what is your take away? >> i agree with that characterization that you described. i do not know about the rest of the characterizations. the president came with a spirit of bipartisanship. there are priorities that need to be addressed in this congress. the conversation was marked by a friendship, and friendship is always marked by candor. that is not to say that there is total agreement on every issue. i do not like to talk about what goes on there, but the speaker put out a statement of things you brought up relating to energy in our country.

i made the point that, as i did now, and i will not do it in the third time, about what is happening with deductions in our country. the president's commitment that he made in the state of the union address of all of the above to transition to something more friendly is what we all subscribe to. i think it is positive. favorable to the jobs package. this has bipartisan support across the board and the path of least resistance. i think we only have time for one more question. >> what you think about republican in-fighting and passing a budget and the idea of passing a budget along the lines of july's budget?

>> well, let me say that i do not know much about their in- fighting. you will have to ask the speaker about that next. but it is budget, not a statement about national values, not about what the priorities are for the american people. president obama's budget is. we will have our democratic house budget as we go forward. our distinguished ranking member will be listening to members here, hearing their views and what our priorities should be in the budget. but i will tell you what it will not do. it will not end the medicare guarantee your have initiatives in it that can cause medicare to wither on the vine. if you want to have want defining contract between ours and theirs, and there will be many, but the most important one is they are insistent, in one shaper form or another, to end the medicare guaranteed, shift cost to seniors, and cause the withering of medicare. thank you.

>> we are waiting for the president to arrive at the 100 fund-raiser of his reelection campaign. and just a few minutes we will be taking you live to the second evidence that he is attending in york city. wally weight coming here is a discussion from the "washington journal"about energy policy. >> we want to introduce you to

republican from colorado who is chairman of the energy subcommittee at the natural resources committee. he is here to talk about gas prices and energy policy. when you look at the gas prices today, how much effect in the federal government have on controlling the prices tax in your view, how much control should the federal government have? >> they cannot manipulate prices day in and day out. we cannot make a difference overnight with a silver bullet. we can have policies that if they were put in place and we were to access american energy or even use canadian energy to the keystone pipeline, we would have a supply of energy that would allallow for lower gas prices. we are seeing the poor policies

over the last several years. limbaugh vote came into office, gasoline was a $85 -- -- when obama came into office, gasoline was $1.85. it is doubled in three years. we of policies in place that make it harder to access energy. one thing is the new draft offshore leasing plan. we have fewer acres offshore available for exploration and development of energy than we did before barack obama came into office. on shore is is not good either. we have your onshore leases. the loss 11% less chair. if you look at 1984, we have your onshore leases. over time, the trend is downward. we have your onshore leases.

that catches up to us. that is a big reason why prices have doubled. we cannot determine what happens overseas. no one can really affect that. we can do a lot with our own energy. but how much potential energy the ec is not being passed tax hikes huge amounts. there are stil10 billion barrel. offshore, on alaska' has many more billions. we have some in virginia where on a bipartisan basis, the

legislature's would like to open that up. the legislature would as well. that is off limits. we have areas that are not being used. we're talking about tens or hundreds of billions of barrels of oil. >give us the area code. we have about 40 minutes in this segment. this is an article on energy.

host: how much of the talk around gas prices is political positioning? guest: i do not know. maybe there is a little bit of that with any subject. you will have a bias with a democrat or a republican that wants to emphasize certain things, but we do get back to certain truths. let me make a bipartisan statement. i applaud former president bill clinton. when he was in office he opened up a lot of the gulf of mexico, and that is why what good production we are seeing in the gulf goes back to bill clinton and the early years of george bush because those major projects take five-to-10 or more years to bring on line.

you have to go back to previous of ministrations when you see something good happening like that. -- administrations when you see something good happening like that. unfortunately, the president is taking credit for his predecessors, and that is disingenuous. host: here are some facts and figures about energy and oil used in the u.s.. our petroleum production -- host: it goes on to say that we use of 19 million barrels of oil a day in the u.s.

when you look at the array of available oil in the u.s., are we able to be self-support of, because 49% right now is on imported petroleum products? guest: i do not know if every single drop of oil has to come from our own shores. we could certainly use some from canada and mexico. saudi arabia, their contribution is about 1 million barrels a day. that is what we could replace, almost, with the keystone xl pipeline from canada. that would be a hundred thousand barrels of oil a day. you could -- 800,000 barrels of oil a day. you could offset, but i do not think we need to replace every drop. host: the first call comes from mr. lamborn's home town, a colorado springs, colorado, republican line, heather.

caller: you have to control the supply. you can stop refining it, you can't cut it back. speculators dried it up. -- dried it up. we have oil coming out of public lands that no one is paying royalties on. you can buy up leases, and not develop them. that is not a way to run. i think the keystone pipeline -- no one has been telling the truth about that. they do not want public input on that. that oil is not for us. that will go to china. all of the oil produced in our own country goes to the open market, so our developers are not really even keeping the supply back for this country. so, i do not know. guest: i did not catch a question in there, heather, but

about the keystone pipeline, president obama said the latest move from canada to build a southern portion to taxes is -- to kansas is something that he approves of, and they do not have the authority to disapprove. they have the permits. congress has not been able to repeal the law of supply and demand, basic economic principles. if you have more supply, you will have lower prices. host: waterford, new jersey, the gallery on our independent line. caller: good morning. i am glad your first caller covered some of the points i was going to make. it is important for people to understand what the politicians are doing with the story.

they want to dump it down and have people believe that we just need to start drilling and our problems will be solved. when you look to the issue of rising gas prices, a few years ago studies showed that speculation investment on wall street was the cause of the upswing in prices. it is a fossil fuel and it is on its way out. we have to go to a cleaner economy. these politicians want to make political issues in a political year and blamed obama for the problem.

just like when they credited bush's practices that led obama to getting bin laden, they want to credit his practices before he left his second term as to why obama is now reaping the rewards. guest: i did not catch a question in there once again, but i disagree if anyone says supply makes no difference. the more supply you have, that makes prices go down and needs demand. that is why president obama said it is a good thing that canada is building southern portion of the keystone pipeline. host: joseph has this tweet. oil production in america is higher than under the bush administration -- true? guest: there is credit we can give even going back to bill clinton. x we take you live to new york city where president obama has a ride. >> it is good to be back in new

york city. we've got some folks here that i want to of the knowledge. first of all, the event co- chair, thank you. russell simmons, thank you. it we have a couple of elected officials who are here. carolyn maloney is here. bill is here. all the talentk yo to participate, ben folds, the roots, and aziz ansari. this is big. maleate is a big "parks and recreation" fan. this is the only thing she thinks is worth me doing.

i want to thank you for what he said earlier. i have more twitter followers then you, man. i just want to keep him humble and hungry. we all need somebody he does that. for chilly, i have michele. -- fortunately, i have michele. this is an incredible tapestry of what new york is all about. i also want to think all the asian american and pacific islanders who helped get this program off the ground. it is an incredible reminder of my roots back in hawaii and the

incredible visit we made to the india a year ago. it was a little discouraging. the day after our first visit, i opened up the papers and there to headlines. president obama visit india and michelle obama rocks india. so, this is my life. it keeps me humble. i am here today not because i need your help, although i do. i am here because your country need your help. there was a reason why so many of you work your heart out in 2008. i see some friends who were active in that campaign. you got involved because you thought it would be easy.

think about it. he supported a candidate named barack hussain obama for president of the united states. you do not need a poll to know that is not going to be sure thing. you did not join the campaign because a me. it was not about one person. and is not a vision of america where everybody is left to fend for themselves. it is a vision of america where everybody works together and everybody who works are has a chance to get ahead.

this is the change we believed in. the matter what you liklook like, in this country, he can make it if you try. this is the change we believe in. we knew it was not going to come easily or quickly. i want me to think about what we have done in just three years because of what you did in 2008. think about what change looks like. change is the first bill i signed into law. it says women deserve an equal day's pay for equal day's work. i want my daughter to have the same opportunity as someone son.

change a decision made. some politicians were saying let's lead detroit to go bankrupt. with 1 million jobs on the line, we were not want to let that happen. today gm is back on top. the-recorded the highest profits in 100 years. 200,000 new jobs created in the last 2.5 years. the auto industry is back. that happened because of you. change is a decision we make to stop waiting for congress to do something about our addiction and finally raise our fuel efficiencies that. by the next decade, we will be driving american make cards

almost 55 miles a gallon. that will save the typical family money at the pump and give us some independence from the gas prices that have been going up. that is what changes. that is what you did. change is the fight we went. this processes student loans and gives it to families incident suny did so millions of unpeople are able to afford college is a little bit better. change is what happens after a century of crime. it ensures that in the united states of america, nobody will

go bankrupt just because they get sick. already 2.5 million young people have health insurance today because this lesson stay on their parents' plan. every american can no longer be denied or drop by their insurance company when they need care the most. that happened because of you, because of what you were willing to fight for back in 2008. we do not have to hide about serving the country you love. we got rid of don't ask don't tell. changes keeping another promise i made in 2008 for the first time in nine years. there are no americans fighting in iraq. with that war to an end. we refocus on the terrorist

election attacked as on 9/11. thanks to the incredible men and women in uniform. al qaeda is weaker than it has ever been osama bin laden will never again walked the face of the spread. -- al qaeda is weaker than it has ever been a. osama bin laden will never again walked the face of this earth. we make clear that america will abide by those core values that made this a great country. we promoted human rights. the make clear that america is a specific power. we demonstrated that the country's travel down the road of democratic reform, they will find a new relationship with the united states. bearbaiting by the power of our moral example. -- we are leading by the power of our moral example.

nobody has announced a war yet. we appreciate your sentiment. you're jumping the gun a little bit there. none of this has been uneasy. we have more work to do. they're still too many americans out there looking for work. over the past two years, businesses have had a 3.7 million new jobs. our manufacturing sector is creating jobs in the first time

since the 1990's. our economy is getting stronger. the recovery is accelerating. american is coming back. the last thing we can afford to do is to go back to the very same policies that got into this mess in the first place. that is what other folks want to do. i do not know if you've been paying attention. they make a secret about their agenda. they can jack of their premiums about a reason. they want to spend a trillion dollars more a tax rates for the wealthiest individuals even if it means adding to our deficit. forgetting our investment in clean energy are making it tougher for those who are on

medicare. we are better off when everyone is left to fend for themselves. the most powerful complete by their own rules. -- can play by their own roles pare. in the united states, where greater together them we are on our own. we are better off when we keep to that basic american promise that if you work hard you can do well enough to raise a family. it is bigger than you could ever imagine. many of you can retire with dignity and respect. after a lifetime of labor. if you have a good idea to start a business, you can go out there

and start one. if you want to serve, there is a place for you. this is just another political debate. what is at stake is the defining issue of our time. those of us who know we would not be here had it not been for the opportunity given our great grandparents. some of us who are here because of that basic american promise. we are in a make or break moment. we can go back to an economy that build on outsourcing and

phony debt and for any financial problems. all we can fight for an economy that works for everybody, that is built to last, that is built on american manufacturing and energy and education. and the values that made us great. this is the vision america that i believe in. this is what is at stake. i want an america where we are still attracting the best in the practice around the world. i want an america where the next generation of manufacturing is taking root here. i do not want this nation to be known for how much we buy and consume. i want to be selling products all around the world.

we have got to have a tax code that incentivizes people. rewarding companies that of sending jobs overseas. we want capital and talent here. created here in america. we need to make our schools the and the of the world. that starts with the man or woman at the front of the classroom. a good teacher, a recent study showed a good teacher can increase the lifetime earnings of one class by over two hundred $50,000. [applause] i do not want to give folks in washington-and teachers. i do not want -- i do not want to hear folks in washington bashing teachers. they need to reward the best teachers. let's bring flexibility with

creativity and passion and stop taking to the test. and demanding accountability. and replacing teachers who are not helping kids learn. make sure they are supported. when kids graduate, the most daunting challenge is how do they afford college? we have more to which in debt and credit card debt in america. -- more to bucshon debt then credit card debt in america. colleges and universities have to do their part to be more affordable. they cannot stop tuition from going up. the funding they get from taxpayers should go down. higher education cannot be a luxury. it is an economic imperative that every american family should be able to afford.

we have got to invest in our people. that is what will determine who can compete in the 21st century. other countries, they understand this, they are catching up. why are we not? why are we saying teachers laid off? why are we making it harder for young people to get a college occasion? our priorities have gotten skewed. an economy built to last is one where we are supporting scientists and researchers, making sure the next breakthrough in clean energy happens here in the united states of america. we have subsidized will companies for over 100 years. it is time to end those giveaways to an oil industry that has rarely been more profitable. let's double down on clean energy that has never been more promising. [applause]

we need to rebuild america. i am a chauvinist when it comes to infrastructure. i want america to have the best stuff. i want us to have the best roads and the best airports and the fastest railroads and internet access. it is time to take the money we are no longer spending at war, use half of it to pay down the debt, and use the other half for nation-building here at home. let's put people back to work rebuilding america. in order to create this economy, built to last, we have to make sure we have a tax system that reflects everybody doing their fair share. that is why i have said we should follow the buffet role. if you make more than $1 million a year, you should not pay a lower tax rate and your

secretary. -- then your secretary. [applause] if you make less than two hundred $50,000 a year, -- $250,000 a year, your taxes should not go out. -- up. this is not class warfare. this is basic math. if somebody likes me gets a tax break i do not need then one of two things have to happen. i did that is going to add to the deficit -- either that is going to add to the deficit or we are going to reduce the deficit on the backs of folks who cannot afford it. the senior who suddenly have to pay more for medication. or a family that is trying to get by. that is not fair.

it is not right. it is not who we are. i hear a lot about the values during the election season. politicians love to talk about values. i think back when i hear this talk about the values of my mother, my grandparents taught me, hard work, that is a value. looking out for one another, compassion, that is a valley. the idea that we are all in this together and that we trust and care for one another, that is a valley. -- value. each of us is here because somewhere, somebody took responsibility, not just for themselves, but for the future, for their family, their community, their nation. the american story has never

been about what we do alone, it is what we do together. we will not win the race for new jobs, security for middle-class families, with the same old, you are on your own economics. it does not work. it never worked. it did not work when we tried it in the decade before the great depression. it did not work when we tried it in the last decade. it will not work now. it will not work. [applause] what everybody here understands is if we attract a teacher by giving her the pay she deserves and she goes on to educate the next steve jobs, we all benefit. if we provide faster and an aunt -- faster internet so a store owner can sell his goods around the world, and

entrepreneur can start promoting music, even those who do not have a lot of capital. if we build a new bridge that saves time and money, or make airports work a little bit better so that everyone say is a couple of hours when you have to fly somewhere, -- everyone saves a couple of hours when you have to fly somewhere, we all do better. this has never been a democratic or a republican idea. the first republican president launched the transcontinental railroad, the first grant for colleges, in the middle of the civil war. he understood, those investments will pay dividends for decades to come. teddy roosevelt, republican, called for a progressive income tax. he understood that we do not want a system in which barriers

are created for the majority of people to be able to succeed. dwight eisenhower, republican, build the interstate highway system, bringing us together as one nation. republicans in congress supported fdr when he gave millions the chance to go to college on the gi bill. this is not a left-right idea. this is an american idea. that same sense of common purpose, it still exists. not always in washington, but in america, you go to main street, a town hall, a diner, a small business, you talk to the members of our armed forces, you go to a synagogue or a mosque or a church, a temple, our politics

may be divided but americans, they know we have a stake in each other. they know that no matter who you are, where you come from, we rise and fall as one nation, as one people. that is what is at stake right now. that is what this election is about. [applause] let me say this, new york, this has been a tough few years for america. we have taken some shot. -- shots. the change we fought for has not always happen as fast as we would like. after all that has happened in washington, you look in the sea

the mess and it is tempting to say, maybe change is not possible. maybe we were naive. i know it is tempting to believe that. remember what i always used to say, i said, real change, big change is always hard. it is always hard. the civil rights movement was hard. winning the vote for women was hard. making sure that workers had some basic protections was hard. around the world, ghandi, nelson mandela, what they did was hard.

it takes time. it takes more than a single term. it takes more than a single president. it takes more than a single individual. what it takes is ordinary citizens who are committed to fighting and pushing and inching this country closer and closer to our highest ideals. i said in 2008, that i am not a perfect man. i will not be a perfect president. [laughter] but i promise you, i promised you that i would always tell you what i believe. i would always tell you where i stood. i would wake up every single day thinking about you. fight for you as hard as i could.

do everything possible to make sure that this country, that has given me and michelle and our kids so much, that that country is there for everybody. and you know what? i have kept that promise. [applause] if you are willing to work with me and pushed through the obstacles, and push through the setbacks, and get back up when we get knocked down, if you are willing to hold that vision we have for america in your heart, then i promise you change will come. if you are willing to work as hard as he did in the last election in this election, then we will finish what we strutted and remind the world why it is that america is the greatest nation on -- what we started and reminded the world why is that america is the greatest nation

on earth. god bless you everybody. god bless the united states of america. ♪ ♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] ♪ ♪

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♪ ♪ >> in a few moments is senate foreign relations hearing on the political unrest in syria. in more than an elmore and 1/2, ben bernanke testifies on capitol hill -- in more than an hour and a half, ben bernanke testified on capitol hill. after that ,ben cohen on his support of the occupy wall street movement. >> if you had said in 2006 that the world would be begging for the united states to use force again in the middle east within three and a half years, everyone said would -- everyone would

have said you were crazy. >> robert kagan serves on secretary clinton's advisory board. >> there is a lot of continuity. there is a broad consensus. what you are seeing is the kind of consensus in the foreign policy community. there is a lot of overlap between the two parties. for more on robert kagan, tune in sunday night at 8:00 eastern. >> now, a senate foreign relations hearing on political unrest and violence in syria. the united nations estimates more than seven dozen people have been killed since the start of the uprising. this is a little more than an hour and a half.

>> this hearing will come to order. thank you. i apologize for being late. i was a little delayed their. senator casey will chair this morning. which, i will have to do that. we appreciate everyone's coming here to discuss the ongoing situation in syria. as we all know, serious it's in the heart of the middle east, straddling its ethnic and sectarian a fault lines, and all of the region's important powers have a direct interest in what is happening in syria, as to non-state actors like hezzbollah and hamas and others. the taliban appears to be trying to take a advantage of the chaos. as many as 9000 civilians have

died with tens of thousands more displaced from our homes. in the syrian city of homs, there has been indiscriminate shelling for three weeks now. hundreds have died. the city is running critically low on food and medical supplies. given the indiscriminate killing of its own citizens, and given its back of the hand to the global community as well as the regional powers that have tried to intervene, it seems the assad regime is ultimately going to fall. the longer the endgame, the messier the aftermath, and obviously, the more complicated the in between. the prospect of a full-fledged sectarian civil war is a stark reminder of a terrible situation that could become still much worse with

potentially devastating consequences for neighbors. israel, lebanon, jordan, and adverse duplications for the middle east. the question for congress as well as elsewhere in america and the world is where do we go from here? america at at may have little direct leverage on -- america may have little direct leverage on syria, it is important to galvanize at the international community. none of us should underestimate the ability of the global community to have an impact on any renegade regime anywhere in the world when the full intention and focus of the global community is properly convened. the last year has shown that when the world acts with one voice, motivated by the cause of freedom, a tyrant's script on power does not seem so fierce.

that is why the russian and chinese veto at the united nations security council was so disappointing. because it actually extended to assad a political lifeline. he continued to use violence against his own people. we need to encourage the russians and the chinese and let them know that while we would like their positive involvement in putting a halt to the conflict, we are able to do and prepared to do much more if they continue to block of progress with the security council. the arab league and gcc have ramped up their economic and political pressure. in turkey, interestingly, a year ago, a close friend and supporter of syria, had broken and done the same. the u.n. and the general assembly in recent weeks voted

to condemn the crackdown. two months ago, the senate endorsed unanimously condemnation of the regime and expressing its commendation to the syrian people. there are still serious questions about various oppositional organizations, including especially the syrian national council and the free syrian army. they share the goal of getting rid of assad. they have not yet unified in the way that the libyan transitional national council did. i believe it is time for us to redouble our efforts to engage with the opposition to shape their thinking, to understand it more fully, to identify more fully their leadership, too strongly encourage them to coalesce into a coherent

political force. the friends of syria group is now a multilateral mechanism to support the syrian national council and other groups with technical assistance. is true that many syrians themselves remain on defense, especially members of the minority groups. they are horrified by the regime's atrocities, but they are also part but by the potential for a broad scale sectarian strife. thus, it is vital that the sec to everything to unify politically, to put national emotions before political ambitions and to ensure all religious and ethnic minorities that they will enjoy full freedoms in a tolerant post- assad society.

the international community's political support will a tamale be contingent on their ability to speak with one voice that represents the full diversity of syrian society and embraces the values that will bring the committee to its side. @ debate has started in congress and the region about whether -- a debate has started in congress and the region about whether and how it will start with the syrian army. there are serious questions to be answered about the free syrian army. we can think about how the international community can encourage its restraint. finally, we are all deeply concerned about the disposition of syria's biological and chemical weapons and its lethal conventional weapons systems. i know the administration has

formally engaged with respect to this particular challenge, and are working diligently to ensure there are contingencies to make sure these weapons do not fall into the wrong hands. i would urge my colleagues to be fully supportive of these efforts. to help us sort through the complexities of this situation, i want to emphasize, this is not libya. this is not egypt. this is not tunis. this is of far more difficult and complicated situation. to help us work through these today, we're joined by two of the most accomplished members of the american diplomatic corps. i am pleased to welcome robert ford and jeffrey feltman. f r jerryeldman knows -- secretary feldman knows the region well and i think he

understands the consequences this crisis could have. ambassador, we all want to commend you on your courageous, importance efforts that you made to distinguish between the clientitus that can affect issues of broad. i think we were all impressed by that. robert ford left the country after threats to its own safety, but he returned. so, we thank you both in advance for providing your insides and look forward to your testimony. senator? >> thank you, mr. chairman. i join you in welcoming the

secretary feldman and ambassador ford to this committee. ambassador ford was on the ground in syria and deserves special commendation. the hearing today takes place amid the deadly violence and gross human-rights violations, the degradations of the assad regime continues to inflict on the syrian people. since our last hearing on syria in november, the death toll in this 11-month conflict has risen dramatically. we're confronted with horrific images. assad it is targeting civilians, journalists, doctors, women and, and children.

i went to a meeting last week of the friends of the syrian people that brings together six nations and international organizations. continue to focus on humanitarian needs in syria. the efforts -- the absence of russia and china at the meeting was the neglect of their duties as permanent members of the united nations security council. the outcome and syria will have deep implications for the internal politics of neighboring countries, ethnic conflicts in the middle east, and broader issues. terrorist groups will take advantage of instability and sectarian violence could spill over syrian borders.

in the midst of this up people, we know syria has substantial stockpiles of chemical and conventional weapons that could directly threaten peace and stability throughout the region. our governance is focusing on intelligence and counter- proliferation assets to contain this threat. the development of definable opposition would improve chances. the damage to the syrian people could be contained. some constructive opposition voices are attempting to emerge. at present, the syrian opposition lacks cohesion, and a specifically defined political agenda. it also lacks the physical space and technical means to mature, to overcome its internal differences and develop a plan for democratic transition. these sectarian divisions from

iran and elsewhere and the lack of a democratic political culture weigh heavily against the short-term emergence of unified opposition on which to base the tolerant democracy. this presents the united states with very limited options. syria must support international humanitarian efforts. it should also work with willing states against the spillover affect generated by violence in syria. we should not underestimate our ability to shape events in the country this morning. further attempts by the united states or the west to closely manage the opposition could backfire in an environment where the government blames outside influences for syria's troubles. while not taking any options of the table, we should be extremely sceptical about efforts to commit the united states to a military

intervention in syria. under the constitution, taking up an armed conflict in syria rest with the congress. going forward with our international partners, and encourage you to work closely with congress as plans evolve, particularly as the situation becomes more complex. i look forward to your testimony very much and we are honored that you were with us today at. >> thank you, senator lugar. secretary feldman, if you would lead off? and then ambassador for. >> thank you but, mr. chairman, senator -- thank you, mr. chairman, senator lugar. thank you for having this meeting. i met here to discuss the crisis in syria.

since that time, our european allies have enjoyed it to impede the financial backing of the crackdown. the arab league has suspended syria's membership, with many members downgrading diplomatic relations and freezing syrian bank accounts. the arab league put forward a transition plan for syria. over 137 countries supported the u.n. general assembly resolution condemning the syrian regime and supporting the arab league transition plan. the friends of the syrian people have been urged to endorsed the transition plan. the syrian opposition in tunis

has articulated a clear transition plan and address minority fears convincingly. we now have $10 million in immediate humanitarian assistance with millions more from other countries. the u.n. and the arab league have joined and sent the high- profileenvoy kofi annan. and just this morning, the human-rights council in geneva overwhelmingly passed a resolution describing the situation in syria as a man made humanitarian disaster. and we all know the identity of the man responsible for that disaster. these are just some of the examples of regional and

international resolve, but nevertheless, as both of you have described, we have seen the assad regime has intensified its attacks against the syrian people. this situation is, frankly, terrific. including indiscriminate artillery fire against neighborhoods. and today's report from homs is terrifying. large numbers of syrians are living under siege. the basic necessities of life including food, clean water, and women and children are wounded and dying for lack of treatment. innocent people are detained and tortured and their families are left to fear the worst. yet, despite the regime's brutality, the people of syria demonstrates enormous courage. the their determination to continue protests for their rights -- mostly peaceful protest -- is a tribute to the human spirit. as a secretary watching the events unravel in the arab

world, i have to say we do not know when for sure the breaking point will come in syria, but it will come. the demise of the assad regime is inevitable. it is important that the tipping point for the regime to be reached quickly, because the lumber the regime of salk's the syrian people, -- the longer the regime assaults the syrian people, the greater the chances. as are referred at the start, to the friends of the syrian people group, we are translating international consensus into action. we are galvanizing international partners to activate more effective sanctions and deepen the regime's isolation. we have called for the immediate transition in syria. we are moving ahead with humanitarian assistance for the

syrian people, demanding access be granted and that attacks cease. a proud and democratic syria that upholds the rights and responsibilities of all citizens, regardless of their religion, gender, or ethnicity. together, we are working to persuade frightened communities inside syria that their interests are best served by helping build a better syria, not by casting their lot with a losing regime, a corrupt and abusive regime, which has been a malignant blight in the middle east for far too long. the goal of the opposition, and the syrian people alike, is as followed. as syrian-led political transition to democratic government based on the rule of law and the will to people with

protection of minority rights. i would like to close by echoing this fellow witness and friend ambassador robert ford. his actions on the ground in syria this past month have been a great credit to him, the foreign service, and the united states. he repeatedly put himself in harm's way to make it clear that the united states stands with the people of syria, and i want to think this committee for its leadership in supporting his confirmation. >> thank you very much. we appreciate that. ambassador ford? maybe you should not say anything. just stopped. [laughter] >> senator, mr. chairman, ranking member lugar -- thank you for this invitation to come and speak before the committee today. i do not want to do a long opening statement because i am

hoping we can open discussion about syria, but i do want to say how much i appreciate this committee support -- this committee's support during my time in damascus. we got messages from members of the committee staff asking how we were doing, how my team was doing. i would say that my team really appreciated those messages, especially during some of the tenser moments. it meant a great deal. i had a terrific team in damascus. i really would like to think this committee for your support for our efforts. beyond that, i think the statement that investor felton made is quite good and i will stop there. thank you. >> thank you very much, mr. ambassador. we certainly appreciate your dialogue. let me begin by asking both of

you if you would share with us your perceptions of the state of the assad regime right now. there have been executions of various military figures. that is due to any plots or defection. what is your view of the current fragility, if it is indeed that all? an alloy family enterprise that has a lot to lose, obviously. >> a couple of things i would say on that, senator -- first, the assad regime is under greater stress than it was even too much for three months ago.

this is in part because -- even two months or three months ago. this is in part because of restrictions. the military has retained its cohesion. but they are under significantly more stress now. in the first quarter of 2012 than there were even as recently as two months or three months ago. within the ruling circle, if i can call it that, there is greater concern. they are well aware that the business community, for example, is very unhappy. they have changed several times on a dime some of their economic policies to try to placate an increasingly unhappy business community which is suffering because of the sanctions that we have imposed, europe and now arab countries have imposed. in general, they understand

this is the biggest challenge during the 40 years of the assad makhlouf family control of the area. >> to refer back to that tympan point, the breaking point that i talked about in my -- that tipping point, the breaking point that i talked about in my opening comments, the calculation is to appeal to those people who have not yet made up their minds for change, but do not like the way that -- they do not like the direction that assad is taking them. uc meetings in tunis as a way to appeal to the broader population, to try to move them toward change.

this is a very important part to getting that second point, getting more people on the side of change. >> i cannot remember if it was the post or the times, but there was a photograph of the kuwaiti parliament having a vigorous debate and ultimately deciding to condemn violence. there seems to be a somewhat surprising and unique movement in the gcc and a number arab countries to really take unprecedented steps here. could you speak to that end with the potential is that is in the arab world itself, what the reactions may be and what the potential there is for that to have an impact on the outcome? >> i think the arab leadership fund, the issue of syria has

been remarkable. we are backing the arab league's own transition plan. syria sees itself as a major country in the arab league. the syrians call themselves the beating heart of the arab world. suddenly, the arab league has potentially suspended serious membership. this is not in north african country like libya that is out of the arab mainstream. it is significant with the arabs are doing. why is this happening. in part, this is happening because of the air spring if you look at opinion poll after opinion poll, musharraf is at the bottom of the list of popularity among leaders. he has no credibility across the arab world. i think the arab leaders want to show their own population that they get it, that they understand, that they need to be in tune with their popular opinion. without question, part of this has to do with competition with iran. people know that musharraf has

made serious a proxy for iran as a subservient partner for iran but would not underestimate the impact of the arab spring, even on those arab countries that are not going through a transition. i believe that arab leaders recognize that they cannot be on the complete opposite side of their public opinion. the kuwaitis, for example, there was a scene in the kuwaiti parliament yesterday. >> based on your experience in lebanon and the region, share with us your possession -- your impressions of the rest and the sectarian violence that could flow if there is a total explosion or inclusion. >> without question, the minorities in serial look at lebanon or recently iraq with fear.

i defer to embassador ford to talk about the cut delayed since -- to talk about the calculations inside syria. the syrian opposition is to disprove the musharraf theory. it is his theory that says look at lebanon and look at iraq. this is where we're headed if you do not back me. there is irresponsibility on the part of the syrian national counter and broader opposition groups to show that that is not where they need to go. >> what are the dynamics between syrian national council and the internal local groups? >> a couple of things i would say on that -- the two organizations are separate. there is not a hierarchy between the syrian national council.

it has its own executive party and a broader general assembly. the free syrian army, as best we understand, has its own leadership hierarchy. they are not organically linked. however, they certainly do talk to each other. on the ground in syria, local revolution councils are being set up now. if you want, for example, aljazeera television, you often see a spokesperson for the revolution council in homs talking about the atrocities that are going on there. it is a very young man, a very brave man, who will literally go through the streets. it was he that broke the news about mary holden's death, for example. people like him talk to the free syrian army, but he is not free syrian army. you mentioned in your statement

about the divisions between the syrian opposition. there are different organizations that makes it a little more complex. so they talk to each other. sometimes the coordinate, but they not organically linked. >> thank you, mr. chairman. i want to pick up the point you made, secretary feldman, about the oil exports and the success apparently been bottling up a high percentage of the government. likewise, other sanctions against the country have caused what seemed to be normal terms and economic depression by normal standards. this is likely to go further. what is not clear to me and i would like some thoughts that you have about what food supplies are available to the people of the country. how much is produced in syria

now? i've understand that a drought has occurred this year. it was a critical factor in egypt, even while things were going on in tahrir square. food subsidies had ceased and that was the cause of considerable unrest. even if there were these problems in the business community or money for the assad regime, it would appear that the allow we group, as opposed to the 65% of the population nor sunnis, the group that has an existential problems. the minimal be in favor of assad, but there is general -- there may not -- they may not be in favor of assad, but there is a general fear.

protection of minority rights, this may be down the trail a few years in the future. your prediction is more of an accelerated turnover of the regime than most are predicting. most press accounts i have seen indicate that the assad regime may continue for years, not months. and the lack of cohesion of the opposition could even grow greater rather than smaller as various other forces enter the syrian picture and put off segments that may be helpful to their situations. can you comment generally on the critical problems present -- the economic depression, may be food shortages that are dire on

the one hand that lead to general unrest and come on the other, can we reasonably anticipate of the next three years to five years, say, that there could conceivably be a transition to something even with the vestiges of democracy, human rights, respect for minorities? the original prediction that i see is that assad might go, but the chaos that would ensue would be horrible including killing of people and a general melee. it is not a question of who decides, but the pending disaster from a lack of authority. >> the dangers you point out are real. the opposition leadership recognizes those dangers. it is one of the reasons i said our policy is to excel ricky arrival of -- of that tipping

point. i do not know what that to pinpoint is. we do not have any magic bullets to make it come tomorrow. the longer this goes on, the deeper the sectarian divisions and hire the risks of long term sectarian conflict. the higher the risk of extremism. we want to see this happen earlier. but the risks you point out are recognized by the opposition. despite all of the divisions between the opposition, the leadership of these groups to have a common goal. they do seem to have a common understanding of the importance of the fabric of syrian society, the importance of preserving that fabric. i was in tunis with secretary clinton and listen to an inspiring speech where he appealed directly to christians. but to the syrians, he said

something like many of you have left over the years. you have felt the need to leap over the years. and when you leave, part of syria dies. and we want a syria where you can all come home. i want to convey the sentiment of that. i think there's something to work with in the opposition leadership, this understanding that what is special about syria is that rich mosaic of communities, religion, ethnicity. and people want to preserve that. the aloites are scared, that is true. on the economic side of things, the syrian business community, as i am understand it, there are levantine traders who have worked for decades, if not centuries, in commerce in the

middle east and beyond. this is one of those communities who need to understand, in our view, that its future is better insured under a different type the system than is there now. one of the things that came out of the tunis meeting was a discussion, a commitment by the friends of syria, to set up a working group to talk about reconstruction of syria after words in ways that the business community could see. we're talking about trade relations, investment relations, financial communications. right now, the sanctions imposed on syria are by turkey, the arab world, by europe, and the united states. it has cut off humanitarian aid, including food. however, food prices are rising without question. with 30% of the syrian population before the party line before this began, there's more hardship -- under the poverty line before this began, there's more hardship for more

people. on figure 24th, it was announced that we make sure that we have the money to pay for partners who are used to dealing in conflict situations and provide resources. >> you have a comment. >> if i might, let me address three issues really quick. first, the economic situation that you asked about, and then i would like to make two points on the political side. first, with respect to the economy, it is in a sharp downward spiral. the exchange rate, for example, has depreciated almost 50% in less than a year.

it is really in the space of about seven months. it has driven prices on the local markets, for example, in damascus, where we monitor prices, food prices went up something like 30% between december and the beginning of february. that is a very sharp rise. what it is doing in syria is really -- consumers are contracting their purchases. that is aggravating the spiral that is going down. it is one of the reasons the business community is so upset. the sanctions that we have imposed had a real impact. we have tried as best we can, senator, to target our sanctions so that they do not hurt the syrian people. we have targeted government revenues, for example, in order to make it harder for the government to pay for its repression, to pay for its military forces. but we have never tried to block supplies of, for example, heating oil or cooking gas that would go into syria.

but there are terrible shortages of these. when i went back after being in the united states, i went back in december, the stories i heard from people, the biggest problem they complain about in damascus, aside from the fear of oppression and being arrested, the next thing out of their mouths was that there is no cooking gas. there is no heating oil. and damascus is surprisingly cold in the winter. it snows. the economy is hurting. food supplies are available, but people are reducing their consumption in general because of the prices. with respect to the political side of this, two points must be made. first, the assad regime, in its darkest moments, will try to paint this as a fight against sunni arab islamic extremists. they're trying to frighten

minority communities, especially when these minority communities look at what happened in lebanon and iraq. i think it is important for americans to understand that this is not about alois vs a sunni majority. they have suffered just as much brutality as their neighbors down the road. it is important, for example, that one of the leading activists on the ground in syria -- and she is in hiding and moves around from place to place and will pop up in demonstrations -- she is a young woman aloi movie actress. she is very brave. the government has tried to arrest her many times. she is an anoli and people know this. this is about a family that happens to be aloi.

we have constantly urged in our discussions with the syrian opposition in the country and outside the country to underline to the communities in syria, whether they be christians or business people or druids -- it is a very complex social make it -- that all people in syria would be treated equally, that all people's basic human rights would be respected. and it would be a syria where all different communities would be able to live in harmony. we underline that message every time we see the opposition. the opposition is divided, as you have noted. i think -- i do not think it will unify into any single organization anytime soon.

can the united around one vision? i described our vision and our suggestions. can the unite around a vision and can they unite around a transition plan? they do not have to unite into one single party. but they do need to share a vision and they do need to share a vision on the way forward. that is also what we are counseling. we're not writing their transition plan. that is not our role. syria needs to do it. but they do need to get behind a plan. >> thank you. hopefully, we can stay so we have a lot of senators and have a lot of people who have questions. >> thank you, mr. chairman. mr. secretary, can you talk to us about what measures are being taken to encourage the russians or the chinese to remove their objection to action in the security council?

in that regard, as you answer that, are you consulting with treasury on the possibility of designating and imposing sanctions under executive order 13572 on russian and chinese entities selling weapons to assad? there are a lot of media reports stating that russian state arms dealers are continuing to supply the assad regime with arms. at least for cargo ships have left a russian port for a syrian port since december this past year. they were carrying ammunition, rifles, and a host of other armaments. can you give us a sense both of what is happening at the security council to move of them in terms of security council action and are we considering actions under the

executive order considering this arms flow? >> you put your finger on a key element of any way forward in syria. i have to permit from the outset that i am not a russia expert. i would have to defer to my boss and my colleagues in the european bureau. but i want to assure you that the contact with russia at all levels of continuing -- russia has had an interest -- an interesting influence in syria for a long time. russia will not divert those -- russia will not preserve those interests that russia deemed to be important if it basically rides the assad moahmoud

titanic all the way to the bottom of the ocean. i went out with a colleague to moscow a couple of weeks ago to have a discussion with the russians about how we see the way forward in syria, how we see the inevitable demise of assad. i felt that there was a lot of discomfort in russia about where they are. their analysis is not all that different from ours about how unsustainable the situation is for musharraf inside syria. so far, we have been disappointed, to use stronger language, about russia's actions. even today, when the human rights council passed a resolution condemning what is happening in syria, the vote was 39-3. who were those three? china, russia, and cuba. they refused on civil rights grounds.

it is time for the security council to act. this is the type of situation in syria that deserves security council action. we are still in conversation with the security council in an attempt to persuade them that they can be part of a solution. they can use their influence inside syria and be part of the solution rather than continue to block. the question of arms that you raised is a deeply disturbing one. why are the russians to condemn foreign interference in syria being the ones, along with the iranians, to exit continue to be shipping arms from russia. they should probably have a discussion with colleagues from other agencies. >> i am happy to have that. i just want the administration to be thinking about whether we can get our russian and chinese counterparts to understand.

they seem to be doubling down. at least russia seems to be doubling down. there flow of armament almost seems to be doubling down as well as their transactions in the security council. in order for all this to have mean, it needs to be enforced. i certainly hope that, at a minimum, they would do that. because stopping the flow of armaments to assad is incredibly important. let me ask you one other question. what is the possibility of the situation devolving into a civil war? if so, what concerns you have with the political and economic implications of a syrian war on serious neighbors, specifically lebanon and jordan where they might receive thousands of syrian refugees? >> as serious flee the violence go to neighboring budget as syrians -- as syrians flee the violence to go to neighboring

countries, they are already doing that. there's already a spillover effect. it is deplorable. we salute those families in those countries who are hosting syria outside their borders as part of -- outside their borders. we try to provide assistance to those families and governments. musharraf said his people want to believe that there will not be a civil war. the propaganda machine wants to frighten people into believing that they have no option than to fight with him.

all of us recognize that it is a risk. but it is not a question right now of aloites vs. sunnis. but it is the local mafia that -- but it is not a question of alawites vs. sunnis. but is the local mafia that has hijacked the status syria for four decades to enrich itself and protect itself against the syrian people. that is what is happening right now. >> thank you. senator rich? >> ambassador ford, first of all, thank you for your service. i applaud your statement that what our policy is and you conveyed that to the opposition and what they need to do and how they think about this.

having said that, in looking at what is happening on the ground out there, your statement about being a complex society is an understatement. i understand. you have the druids and the kurds and the sunnis and about a dozen other smaller groups. the difficulty i have is -- they do not have much of a history. our culture has trouble thinking along those lines because they are so segregated. they are not like we are where we amalgamate into one society. they are very, very segregated. they marry within their groups. they stay within their groups. they socialize and do business within their groups. saying, when assad goes, they

will all get together and do this, i am pretty pessimistic about that. i hear what you're saying. i think it is a good position to take. but from may simply pragmatic -- from a puritely prgamatic stand point of view, could you analyze your own analysis of it from that standpoint? >> it is a very fair question. it is a sad truth that not only in syria, but in other countries in that region, there is no history of rule of law and respect for human rights. that is the historical reality. what i would say is a couple of things on this. one of the things i have learned from the arab spring, which is unprecedented in my 30 years working in the region, going to when i was a peace corps volunteer.

there is a new generation coming up, and this generation is plugged into the internet and very plugged into satellite television. they know more about how to upload different kinds of videos. i had never watched youtube until i went out as ambassador to syria. now i watch it every day. >> do not want to know what you watch. >> we will not go there. there is no history, but the people that are leading the protest movement, they had a vision, they have a vision, and i heard this very strongly when i went to hama and when i visited suburbs around damascus -- they want a country where people are treated with dignity

-- everybody -- treated with dignity, and that is the key word, senator, "dignity." and they have a vision of a country ruled by law. my own experience, having served in iraq, this is a very hard thing to do. we saw the same thing in algeria when i served there. there is change coming in values, and norms are changing because they are plugged into the rest of the planet more than they used to be, and syrians are surprisingly plugged into the mediterranean. that was one of the things i've learned when i went out there. >> that is an interesting observation, and the question i would have is, does that spill over to their cultural hardwiring that they have?

they were raised by parents in a society that protected them from the other minorities, other sects in the country. is that breaking down at all? are they intermarrying? that would be probably the most telltale sign in that. >> in damascus, there are many mixed marriages, and in other parts of the country as well. in fact, one of the things, if we had syrians sitting at this table, they would say to you, senator, we have always lived together peacefully and we have never had these problems. we are not like iraq. we are different. one of the things that the

political opposition needs to do, and we have told them this repeatedly, they need to address the fairness directly, and not simply fall back on the argument that syrians have lived together peacefully between communities, and therefore there is a problem. there is a problem, and they need to address it. the younger people understand that fear. in the demonstrations, every friday, where they have the really big ones, there are frequently banners that say "the syrian people are one," and what they're trying to express is no sectarian divisions, do not let the assad regime played one community off the other, which is very much what the regime is trying to do. there are signs all over damascus that the government put up saying, "beware of sectarian strife." it is the government raising the issue in the first place.

>> thank you, ambassador ford, and i appreciate your optimism on the subject. i hope you are right. >> senator cardin. >> thank you very much for your heroic service, and we watched what you were doing, and also the international community, and it was a great moment for united states leadership. we thank you for that. secretary feltman, we all read that there will be a tipping point that the assad team will not survive. the challenge is until that happens, the humanitarian disasters will only get worse. how many people are born to lose their lives or their lives will -- how many people are going to lose their lives or

their lives will be changed forever -- until that tipping point is reached is a matter of grave interest to all of us. you point out there is a growing unity in the region in the arab world, which would i think point out that our options may be stronger than we think. we may have more opportunities to try to save lives. i am very mindful of senator lugar's cautionary notes, and we all share that, but my point is, what can we do? what can the united states do in the leadership to minimize the sufferings that are taking place and will take place until the assad regime is removed? what can we do working with international partners to provide the best opportunity for the safety of these civilian populations in syria during this time? >> senator, thank you. talkinga question we're about all the time -- what can we do, either ourselves as americans, but more importantly, what can we do together with our partners in the region and beyond? the "what we can do together" question is the more important one, because our influence in syria is much less than the

influence of some of our neighbors. the economic ties with syria before this started work limited compared to the ties between syria and europe, syria and turkey, syria and the arab world. and there is an international consensus that we need to be doing more on the humanitarian side, working with partners who have a history of working in conflict areas, that can get things into deplorable populations, working with neighbors who are hosting people who have fled. there is consensus on that in the region from the world. that is an important short-term goal, getting things in, making sure where houses are stocked, supplies are prepositioned. there is consensus for

increasing pressure for assad. we talk about sanctions already, but there is always a look at more sanctions that can be done, from those countries that have had stronger economic times in order to deprive the regime of its income. there is a consensus we need to be working with the syrian opposition in its forms, and in tunis there was recognition that the syrian national council is a legitimate representative of the voices of this year in opposition, and we're working with that. your question hints that something beyond that, and far more aggressive action, we would need to have a larger international consensus than currently exists. one thing we are definitely working on is to see what role the security council can play, because we think it is past time for the security council to be playing a role, and that was a consensus that came out of tunis, that people in countries

want to see an end to the blockade by russia and china in the security council from taking action. >> you are right. i agree we need international unity. the security council is where we normally start that. it is not the exclusive area and not the determinative area, but one in which it would give a stronger footing. i would hope we would work together exploring options to be more aggressive where we can effectively work in unity with the international community. you mentioned another point that i found interesting, and that is the popularity of the regime being at the low point, and i would expect that hamas recognize that when it pulled out of damascus, which represents a challenge for us, a terrorist organization that

we are concerned about their influence in that region. it looks like they are taking further steps to become more popular among the arab population in countries. can either one of you give us an update on hamas and its movements and what -- how we are going to counter their issues in its relationship not only with syria, but also with iran and other countries? >> it says something when you have a terrorist organization that has been cobbled for decades by the assad regime pulling out, saying they cannot even stand what the regime is doing. you are right, it gets to the popularity question. if you look at zogby polls, a couple years ago, there was a question posed to arabs -- who

is the most popular arab leader outside your own country's leader? bashar al assad was the most popular leader out of where their home country is. if you look at the same polls today -- same questions, same places -- he is at the bottom of the list. that is not lost on terrorist organizations like hamas. this does not change our calculus on hamas. our demands on hamas are the quartet agreement, which is hamas can be accepted as a responsible player, needs to accept the quartet conditions, renunciation of violence, acceptance of israel, and acceptance of all the agreements signed between the plo and israel. it is telling that hamas cannot

stand what bashar al assad is doing to its people, but it does not changed our calculus. >> senator rubio? >> thank you for being here, and thank you for your service. it is one here to sit here and talk about these things. it is another thing to be the target of some pretty vicious stuff. a quick question -- this is probably for you, secretary feltman, i read in a bloomberg business this week that head of the venezuelan national oil company said companies are not prohibited from shipping oil to syria under current sanctions. i would like to follow up with you to see if that is the case. >> that is technically correct, they are not prohibited. it is morally wrong to provide diesel that can be used in military machines that slaughter innocent syrians. it is morally wrong, but not

legally wrong. it also is not the same as what syria had before november, the ability to export its own oil, earn its own revenues. >> that is a conversation for another day, but one of the things we can talk about is how we can introduce a third-party support. i want to focus on the u.s. national interests, and i want to pause at the story to you and -- i want to posit the story to you and see when you think about it. we looked at something in a country that for many years has been a transit point and haven for terrorists. damascus has been, in addition, a state sponsor of terrorism as well. now the people are saying we

want to get rid of the guy that runs this place, and there is internal division, and we talk about the complexities of all that. it seems to me as much as anything else this is about regime change, a change of direction for the country. from our point of view it as a competition for future and for once, who is going to influence the direction where syria is gone to go in the future? al qaeda sees this chaos and say we get the advantage of the chaos, and create a better place for us to operate in. the widespread sentiment cannot -- the widespread sentiment, which is rule of law, they do not want to be a haven for terrorism, they wanted a normal people in a normal country. our involvement is about what influences our of view of the war, which we could be a player in that country. my guess is, having traveled to libya in the aftermath of what happened -- there are big

differences between libya and syria -- one of the things i was struck by his pro-american graffiti on walls, people walking up to us to thank us, and my point is i think it is going to be really hard five years from now -- not impossible -- for an islamist to go to one of these young guys who thought america was on the side and convince them to join some anti-american jihad. they are really angry at the chinese, where people of syria and the american people, the senate, the people of the united states are on the side of their aspirations. we cannot decide who is in -- who wins and who is in charge,

we want them to be able to pursue their peaceful aspirations and want them to have a country that prospers. in the national interest of the united states, it is critical for syrians to say america is on our side. we want no part of the strange movements that would have us join some anti-american sentiment. that is what our national interest is here in the big picture, and i wondered if you agreed with that or would criticize it -- your thoughts. >> a couple comments. i cannot believe any of these countries, anybody is looking to trade one type of tyranny for another kind of tyranny. it is clear this quest of dignity means people will guard against from going against one tyrants to another type of tyranny. we have also seen that while al qaeda has tried to exploit unrest across the region, that outcry that ideology does not --

that al qaeda ideology does not have any appeal for the sort of young people and protesters across the region who are looking for dignity and opportunity. in terms of the syrian people, i will defer to my colleague, but i will give one example. when ambassador ford went to hama, the people there tossed flowers onto his limousine. he got back to damascus and the regime staged an attack against our embassy. the people of syria know exactly where robert ford stood in terms of their rights and aspirations, and robert ford represented us very ably in showing that that is what the american people stood for. >> senator, i think it is very telling that in the demonstrations every week in syria, they burned russian

flags, chinese flags, they burned hezbollah flags. that tells you what they think. frankly, from our strategic interests, that is a good thing, in that we want syria in the future to not be a militant -- not be the malignant actor that it has been supporting terrorist groups. there is a huge potential for us with the changes going on in syria, but that is not why the syrians are doing that. they are doing it because they want dignity. i think it is very important for us as we go forward to keep in mind that the most important thing we can do is keep stressing over and over our support for universal human

rights being respected in syria, like other countries -- freedom of speech, freedom to marched peacefully, the right to form political parties and to have life under a rule of law, a dignified life. that is what i tried to constantly underline during my time there, just as basic values. syrians can work out their politics, and it is going to be very hard, but if we stay on the track of respect for their human rights, we will ultimately be on the side of history here. -- we will be on the side that wins here. >> thanks very much. i am next in line and i will try not to use all my time, but, secretary feltman, thank you for being here today and for your ongoing public service. ambassador ford, it bears repeating, we are grateful for

your service in so many assignments, but especially under the horrific circumstances you have had to face, and we are grateful you're with us today. some of us -- not being on the ground like you were, have difficulty in imagining or articulating the scale and the gravity of this violence. it is hard to even comprehend. i cannot imagine what it is like, and a number of us have been frankly impatient with what washington has done or not done. and i will say both the senate and other institutions. so we are impatient.

we're also frustrated. this hearing is one way to advance the development of a body of work that can undergird another resolution. we had another resolution, which i thought was very weak, so i'm glad we're having this hearing to advance the ball. i wrote down two words about the formulation of questions, and these are words makes sense for what we're trying to do, for what i hope we can do. one is "solidarity," and the other is a "commitment." we need to figure out not just the outrage, but figure out ways to in fact bring about a policy or strategy that will demonstrate that will prove in

our sense the solidarity we have with the syrian people. that is one priority. the other is commitment to a number of things come a number of priorities, but commitment to humanitarian and medical assistance. if we are going to say -- and it is a consensus position that this should not be a military engagement on this part -- if we say that, we better get the other parts right, and the other parts are humanitarian and medical assistance. my first question is for mr. feltman. i know the friends of syria meeting took place, and that was very positive, and we have a commitment $10 million to the refugees and the idp's, but i want to get a better sense of what was agreed to at tunis,

specifically as it relates to humanitarian assistance and what the united states can do to address this horror. if you could walk through what is definite in terms of an agreement and what would lead to action. >> senator casey, thanks. in tunis, the discussion on humanitarian issues are fell into two categories -- how do we help those countries around syria that are hosting syrians who have fled this country, and that is an easier topic. the countries themselves have been generous. there are not large-scale refugee camps. but regarding relatives outside of syria, and the question is getting assistance to what camps there are, and that is a relatively straightforward

proposition. the second question is a much harder one, and it comes up internally inside the united states government, which is access inside syria. how do you reach the normal populations inside syria? that is a much harder issues. right now the problem of humanitarian deliveries in syria is not supplies, it is not related to money, the international committee has sufficient resources, commitments. it is a question of access. yesterday you had the u.n. undersecretary for humanitarian coordinator, who had been waiting in beirut for days, and she finally left because the syrians did not grant her a visa. bashar al assad is trying to prevent the international

community from having a response. worldunately, in today's there are a lot of conflicts with partners whom we have worked with all right, so you can work with groups, others, aid's, and the office of foreign disaster assistance has a history of making work with trust the partners, but it is not easy. it goes back to senator menendez's question about the russians, because this is one area where the russians have expressed a lot of concern about the humanitarian situation. we would like that to be translated into the type of pressure on the assad regime that helps ease these questions of access. >> ambassador ford?

>> i like the two words, and especially now, when people in cities like homs are under siege. holding this hearing is terrific, and i think the concerns expressed by bodies like the united states senate are especially important. i would never want syrians to think that because we closed the american embassy we are no longer interested in their efforts there to create a new syria that treats people the dignity. with respect to the commitment that jeff was talking about, i want to underline that we need to get access said that we have supplies position. we need to get access into the country, and if the russians would in deed to translate their expressed policy into actions in terms of pressure on the syrian government, we would

hope that they would do that now. >> thank you very much. my time is up now. i would submit a question for the record. >> senator corker? >> thank you, and i hope we will have multiple meetings. it looks like we are moving into a situation where military conflict will be weighed, and i cannot imagine that we are not having a hearing on iran every single week. i would think all of us would benefit from it, but we thank both of you for your testimony and for your service to our country. we had a classified briefing yesterday that could not have been more different than the one we are having today. it is really kind of fascinating, and when we talk about the opposition groups, this part is not classified, you ask, what are these guys fighting for? the word "democracy" never

comes up. you have a minority that has dominion over a sunni population, and what the sunnis are fighting for is dominion over the population. this is a conflict between one group of people that has been oppressed by another group of people and their desire to change that equation. when i hear these flowery statements, i do hope especially, ambassador ford, since you have been there, i hope you can educate us, because this is a night and day presentation from what we had in our intelligence community yesterday. >> senator, opposition is divided.

there's no question about that. it is fractious, and there are competing visions within the syrian opposition. there is an islamist element as contrasted to a secular element. that is why i spoke before about the need for the opposition to unify around a vision and the need for the opposition to unify around a transition plan. this would be a way of attracting people who have been sitting on the fence so far to join the larger protest movement itself. i do not know what you heard in the briefing yesterday, but let me just say from direct firsthand experience, i have talked to people who organized the demonstrations, and i have had team members from my embassy

talk to them repeatedly. we got a very clear message from them, the people who organized this, senator, that they had a vision of a state that abides by roll call and is not targeting the aloite. however, it is a complex society, and a longer the violence goes on and the government is driving this violence, perhaps intentionally with this in mind, the greater the risk that the sectarian conflict that we have seen in homs, but really has not been seen to such a degree in other cities -- homs is the worst -- and it would spread and metastasized into other cities in syria. maybe give you some very concrete examples. the druse community is saying they should stop supporting the assas regime and began to

support the protest movement. there have been call by leaders for druse to stop serving in the military and joined a protest military. there have been calls for the aloite community -- to stop supporting the regime. believe the expression was that they said it would be the ruin of us. >> what you are saying is there is no central division. there are lots of different visions, and we have diplomatic relations, is that correct? >> yes, we do. >> and you went over there to put reforms into place, and by the way, there was a controversy over you being there. i supported you doing that.

i thought that was an intelligent thing for us to do, but we had diplomatic relations, we were working on reforms, and they have done some terrible things and are brutal and not the kind of government we want to seek pervasive around the world. the fact is that this is not exactly a democracy movement in syria right now. the people fighting are fighting for power in government. they are not fighting over the banner of democracy as was laid out by mr. feltman, at least by our intelligence community, anyway. >> senator, i have to respectfully disagree. the public statements from a senior figure in the free syrian army about supporting a

democratic state. we do not know what they would do if they were in power. >> would they be in power? if assad was gone, who would be leading the country there? who is it that we're supporting, morally, at least? >> we are supporting a transition which the syrian national council has laid out in connection with a road map by the arab league. i cannot give you a name. this is an important point, senator. the people who are doing the fighting say they are fighting

to defend the protest movement. so there is a link even if you cannot say that the fighters themselves claimed they are fighting for -- >> do you think it is in our national interest to be involved in military operations, farming operations, to join in with al qaeda, hamas, and others, and the folks that are on the ground, the opposition groups, to overthrow the government? >> senator, as i said, we have been supporting a plan developed by the arab states for political transition. the secretary spoke earlier this week at some of the discussions that we have had in house about how complicated this is in terms of thinking about farming people in syria and army

the opposition, how complicated is in terms of knowing who it is we're getting the arms to, and what do they represent. this gets into your question about what are they fighting for. what would they do if they're facing tanks and heavy artillery? these are extremely complex questions, and i think we are not yet at a point where we could discuss it in this kind of forum, at least. >> thank you, and i appreciate you letting out the tremendous complexities and competing forces and a lack of knowledge about what this is about, and hopefully overtime when will understand that more fully, and you will play a role in that. >> senator webb? >> i appreciate the opportunity to listen to you. i would like to pick up a little bit on this notion of afterwards, which you mentioned several times today -- what

exactly is the afterwards? what would it potentially be and what it potentially would not be. repressive regimes sometimes do survive. the best example of that is the chinese government itself, when it turned its armies and tanks on its own people in tiananmen square. it is still in power. another reality is in this part of the world, and both of you have an enormous repository of experience in this part of the

world, the outcomes from these types of unrest are rarely quick, clearly clean, and rarely fully predictable. i have an engineering degree, and i have looking at what has been happening over the last year over the eyes of chaos theory. chaos theory is a scientific theory. it is is a political term, but one degree off, one assumption off, you end up with a compilation of results that is far away from where you thought it might be, and perhaps the best clear example of that is lebanon itself, looking back in the 1980's and beyond. but also i think we have to say

openly that we do not know what is going to come out of the last year. we do not know how the arabs spring is going to play out. it is going to take years for it to clearly manifest itself in some sort of political apparatus in a number of these different countries. there are two questions -- i will ask them both together in the interest of time here -- that i would seek your thoughts on. the first is, there are actors in this region, government actors, that quite frankly may not be saying this openly, but might be hesitant about the complete removal of the present syrian regime, that belief a weakened to a regime might be more palatable in terms of regional instability, even security in some of these

countries, then what would result from capitulation, and i think, ambassador ford, your answer to senator corker shows how the legal -- how difficult the building blocks will be to put this together. the second is we talked a lot about russia, but i would like to know what you think about china. >> you are right, we did not know how these transitions are going to turn out, and the challenge is that our interests and how they turned out are great, but we have to be modest about how much influence we can play in helping to determine this outcomes. you have put your finger a big issue given the transitions going on in the arab world. it is not in the united states interest to see the bashar al assad regime survive.

we have talked about the moral, human rights, ethical questions, but this is a regime that exported terror to iraq. >> i am not advocating that. the question was that there are countries in the region that would be making that point. >> when you talk about what happens after the arab league transition plan, that plan was designed with that fear of civil war in mind. it was designed in a way in which not assad himself, but parts of the current opposition movement together work on a pragmatic, practical transition plan that preserves the state unity, state institutions. one of the things we get

repeatedly from syrian neighbors as well as the opposition -- the army has to be preserved, and people are working on a transition plan with the idea you can preserve the state, but a state and that is no longer a malignant actor in the region to, but can be a positive actor. >> can you be a quick thought on the situation with china? >> neither one of us are experts on china, adding serve our careers in the middle east. but china tends to follow russia on the security council in many of these cases is what my colleagues in the international organizations tell me. china also has certain trading interests inside syria.

china also has interests elsewhere in the arab world, and there is where i think the dialogue with china needs to focus on, which is what china has to lose by losing credibility elsewhere in the arab world. >> thank you, mr. chairman. >> thank you, senator webb. as he said, we had a vote go off at 11:31, and it is a 15- minute vote, and i have a few questions to be able to finish up here and released you and adjourn the hearing, unless we have other senators come in. there are reports that say saudi arabia and qatar may be planning to arm the rebels in syria or may have already begun to arm the rebels. in addition it has been reported that religious support for army the rebels has increase in saudi arabia. what is the position of the u.s. in regard to the possibility that saudi arabia or other countries are arming to

rebels and are we communicating about what our position is about arming the rebels, and could that lead to the empowerment of hamas and al qaeda as a result? i apologize, i was in the chair presiding over the senate. maybe this is ground you have gone over, but it could answer that, that would be great. >> senator, we have been very hesitant about pouring fuel on to a conflagration that assad himself has set. we're cautious about this whole area of questioning, and that is what we have worked with the international consensus on political tracts, economic tracts, diplomatic tracts to get to that to the point we have been talking about earlier. there is self-defense going on answer right now. we cannot criticize the right to self-defense when people are facing incredible brutality. we would like to use the

political tools that are at our disposal, and that includes the security council, in order to advance the point, because it is not clear to us that army people right now will either save lives or lead to the demise of the assad regime. there are a lot of complicated questions. a lot of them were gone through earlier. the regime is using tanks and artillery against entire neighborhoods. when you hear as the saudis talking about the farming operations -- about army the opposition, we're not hearing about tanks. it is a serious question, but there are a lot of complications that one needs to consider. >> ambassador, if you have any thoughts on that? >> i agree exactly with what ambassador feltman said.

we understand that earnest desire, the need, for people under siege in a place like homs, when their homes are being attacked and people want to take up arms to defend themselves. it is human to protect your family. we cannot criticize that. however, senators kerry and lugar about the need to work with regional states to find a durable solution, and that is our thinking, too, and that is why we have been so strongly in support of the arab league initiative and the transition process that it laid out. if i may just add one other comment, senator, we too noticed the increase in support for religious figures in some

arab countries for taking up more arms against the syrian government. we have seen statements among figures across the arab world. we have cautioned the opposition that if they declare some big jihad, they will frighten many of the very fence sitters still in place like damascus, and it will make ultimately finding a solution to this, a durable solution, more difficult. but we do not want to see syria go toward civil war. we want to see the violence stop immediately, and syria can begin a political transition. >> this whole issue of weapons of mass destruction and what is

happening in syria if and when the regime falls. are we making plans about how to account for those weapons, how to ensure they do not fall at the hands of terrorist organizations? is this being discussed among the allies and those on in the region who are concerned? >> this is a topic that is being discussed actively with allies in europe and elsewhere. syria is not even a signatory of the chemical weapons convention. it is a reminder of the stabilizing role that syria has played over the years. we do not have any indication at this point that the stockpiles have fallen out of control of the government. one of the reasons they managed

transition is so important rather than a chaotic transition. we are watching this carefully. some of these are discussions that need to happen in a different setting than today. >> thank you. ambassador, you have any other thoughts on that issue? >> i would underline it is a subject of great concern to us, and we are looking at what needs to be done, but let me assure you, senator, we have a lot of people working on it. >> i know you do, and when i get home to mexico, a lot of people realize there is a lot concern about the brutal massacre of the syrian people by its government, when it started out as a peaceful protest and then evolved into what we're seeing today. all of us on the committee very much appreciate senator kerry

holding the hearing. we appreciate both of you being here today, and we're going to keep the record open until the end of the week. there may be additional submissions, and you may or may not get additional questions as indicated earlier. thank you very much for your service, and with no additional questioners here, we would adjourn the hearing. [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> and a few moments, ben bernanke testifies on the fed's monetary report.

then, one of the co-founders of ben and jerry's ice cream on his support of the occupy wall street movement. after that, president obama speaks at a fund-raiser. later, we will we aired a hearing on the political unrest in syria. several live advanced tomorrow. at the brookings institution boasts a forum on nuclear proliferation. gop presidential candidate rick santorum, and at ohio. we will also be covering mitt romney in cleveland tomorrow at 7:00 p.m. on c-span3. that is scheduled to include remarks from his wife, anne, and lieutenant governor chris christie. >> ben bernanke called on congress to avoid tax increases and spending cuts set to take effect in 2013. he testified before the senate banking committee, and the prospects for the u.s. economy and monetary policy.

this is an hour and 45 minutes. >> i call this hearing to order. today i welcome chairman bernanke back to this committee to deserve the semiannual monetary report to congress. there is reason to be optimistic about our nation's economic recovery. the economy has expanded for 10 straight quarters and private sector employment has increased for 23 straight months. private employers added 2.1 million jobs last year, the most since 2005. there are also reasons to be concerned. the european debt crisis and the continuing track of the

housing market on the broader economy. this committee has paid close attention to these issues and held numerous hearings. while i remain hopeful that we are moving in the right direction, we must continue to monitor the situation closely. on housing, there are a number of policy proposals that should be considered to improve the housing market. i want to thank the governor for her thoughtful testimony on tuesday and for her paper on options to improve the housing market. an additional challenge, the sharp increase in oil prices, has the potential to impede the economic recovery. americans continue to grapple with higher fuel costs when they fuel up their cars or heat their homes.

it is important that all markets are closely monitored -- supply disruption, and i look forward to hearing the fed's views on how raising oil prices affect consumer spending and affects economic growth. i appreciate all the fed has done to encourage economic recovery. i look forward to hearing more from you on the recent actions and possible future actions to protect our economy. economists have also had a poor role to making sure the economy continues to grow house. this week, the full senate continues to consider the transportation bill. this includes the bipartisan effort of this committee to update the nation's public

transportation infrastructure and create jobs. , i am also hopeful that the senate can find consensus on capital formation initiatives, the topic of another hearing next week before this committee, to promote job creation while protecting investors. for so many americans in search of work, it is not too late for bipartisan action to create jobs and promote sustainable growth. i look forward to your views, chairman bernanke come on these and other steps congress can take to at improve the nation's economy. to preserve time for questions come up opening statements will be limited today chairman and ranking member. i would like to remind my colleagues that the record will be open for the next seven days for additional statements and other materials. i now turn to the ranking member shelby.

>> thank you, mr. chairman. since there federal reserve took unprecedented actions in response to the financial crisis, there has been a growing recognition that the fed needs to become more transparent. there was a time when central bankers met behind closed doors and stubbornly refused to inform the public of their decisions. those days are clearly over. the public now rightly demands that policy makers of not only explain their decisions, but also be accountable for their actions. this is especially true in the federal reserve, which now exercises even greater authority over the american economy and the lives of every american. to his credit, chairman bernanke has long recognized the need to modernize the fed. in his first confirmation hearing before this committee, he stated he believed making the fed more transparent would

"increase democratic accountability, promote constructive dialogue between policy makers and in for outsiders, and reduce uncertainty in financial markets and help anchor public expectations." during his last appearance, i noted that he has taken some important steps to improve the transparency of the fomc, including holding press conferences. since then, the fomc has taken another step to improve transparency by adopting an inflation goal of 2%. this is a significant event in the history of the federal reserve. as the chairman has stated, and explicit target could reduce the public's uncertainty about monetary policy and more

effectively anchor inflation expectations. while the fed was establishing this inflation goal, it was at the same time communicating contradictory signals about the commitment to that inflation target. the fomc minutes reveal that the chairman believe the goal would not represent a change in afomc's policy. in addition, fomc has stated it believes economic conditions are "likely to abort exceptionally low levels for the federal funds rate, at least through 2014." and other words, the fed is signaling to market participants that it expects to continue the zero-rate interest policy for the next three years.

if the goal conflicts with the inflation goal, which will prevail? why should participants have confidence that the fed is committed to achieving its inflation goal? if the fed is not serious about achieving this goal, how will the fed pause credibility suffer when the inflation rises above 2%? accordingly today, i hope that chairman can give the committee more insight into how the fomc's inflation goal will work in practice. i would also like to hear whether he believes congress should hold the fomc accountable for meeting its goal, and while the chairman has taken steps to improve the transparency thefomc, the

transparency of the board of governors appears to be getting worse. a recent article said the committee has held 47 of votes, yet they have held only two public meetings. the article noted there has been a steady reduction in the number of open meetings by the port since the early 1980's, when the board had more than 30 open meetings. the fed is making sweeping financial regulatory policy decisions behind closed doors did this is inconsistent with the professed goal of making the fed more transparent. in another troubling new development, the fed recently decided to enter into debate on housing policy. on january 4, the fed issued the white paper white"the u.s. housing market: current conditions and policy considerations."

the goal of the paper was not to provide a blueprint, but rather to outlined issues and trade-offs that policy makers might consider. how subsequent actions suggest that the fed has views about the policies congress should enact. two days after the white paper was released, the fed governor gave a speech in which it was advocated for specific housing policies and effectively askingsgse conservator to ignore the mandate to conserve and preserve access to gse's. that same day, the new york fed president gave a speech in which he argued that it would "make sense for fannie and freddie to routinely reduced principal on the link will press on delinquent mortgages using taxpayer dollars."

these statements suggest to many that the fed does in fact as a blueprint. that blueprint appears to be using the taxpayer supported gse's as a piggy bank. certain fed governors have begun to take sides in what should be at a congressional policy debate. the fed's independence has always been premised on its remaining nonpartisan. the fed has been and should i believe continue to be a useful resource for information and analysis on the housing market. i believed it should not become an active participant in the legislative debate over the future of housing finance. i hope the fed's recent foray into housing policy will not become common practice. mr. chairman, i believe when

you say that you believe the fed is most effective when it is nonpartisan, transparent, and accountable, i believe that is right. i am interested in hearing from you today, mr. chairman, on how to continue to improve the said's improvement on all three objectives. thank you. >> thank you, senator shelby. welcome, chairman bernanke. his first term began under president bush in 2006. director bernanke was chairman of the council of economic advisers during the bush administration from june 2005 to january 2006. prior, he served as a member of the board of governors of the federal reserve system from 2002 to 2005.

chairman bernanke, please begin your testimony. >> thank you. chairman johnson, ranking member shall become i am pleased to present the federal reserve's semi-annual report to congress. i will begin with the discussion of current conditions and the outlook and then turn to monetary policy. the recovery of the economy continues, but the pace of expansion has been on even and modest. after minimal gains in the first half of last year, real gdp increased at a rate in the second half the limited information available for 2012 was consistent with growth for coming quarters and a piece about the pace registered during the second half of last year. we have seen positive developments in the labour market. private payroll employment has increased since the middle of last year, and nearly 260,000 new private-sector jabs were

added in january. the gains have been widespread across industries. in the public sector, layoffs by state and local governments have continued. new claims for unemployment insurance benefits have moderated. the decline in the break over the past year has been more rapid than might have been expected given the economy appears to be growing during that timeframe at or below its longer-term trend. continued improvement in the market is slated to require stronger growth. notwithstanding the better recent data, the market remains far from normal. the unemployment rate remains elevated. the number of persons working part-time for economic reasons is very high. households spending advanced

moderately in the second half of last year, boosted by a surge in motor vehicle purchases facilitated by the easing of constraints on supply related to the earthquake in japan. the fundamentals continue to be weak. wealth growth was flat in 2011. in the housing sector affordability has increased as a result of the decline in house prices and lower interest rates. many potential buyers lack the down payment and history or car to qualify for loans. others are reluctant to buy now because of concern for their in, and the future path of home prices. on the supply side, a 30% of recent home sales have consisted of foreclosed or distressed properties, and

vacancy rates remain high, putting downward pressure on prices. or positive signs include a pickup in construction in the multifamily sector. manufacturing production has increased 15% and has posted solid gains since the middle of last year. an ongoing increases in business investment and exports. real export growth slowed over the same. as for an activity decelerated particularly in europe. the members of the board recently projected activity in 2012 will expand at about the pace registered in the second half of last year.

their projections for growth this year have a central tendency of 2.2% to to put 7%. this is lower than the projections they made last june. endeavour of factors have played a role in this reassessment. the annual revisions to the national income accounts released last summer indicated the recovery had been somewhat slower than estimated. fiscal and financial restraints and europe have weighed on conditions and global economic growth and problems in u.s. housing and mortgage markets have held down construction industries, but also household wealth and confidence. looking beyond 2012, fomc expects economic activity will pick up gradually, supported by the continuation of monetary policy. with growth in 2012 projected

to remain close to what we saw in 2010 -- looking beyond this year, participants expect the unemployment rate to continue to edge down only slowly toward levels consistent with the statutory mandate. it will be important to the fight incoming information to assess the the underlying pace of the recovery. at the january meeting participants agreed strains in markets posed significant risks to the economic outlook. investors' concern about levels of government debt and european countries have led to substantial increases in sovereign borrowing costs, stresses in the banking system in europe, and reductions in the availability of credit in the euro area.

to help prevent spilling into the u.s. economy, the fed extended the terms of its swap lines other banks and continues to monitor the european exposures of u.s. financial institutions. and number of constructive policy actions have been taken public in europe, including the program to extend a three year loans to european financial institutions. european policy makers agreed a new package for greece. critical fiscal and financial challenges remain for the europe stone. the resolution of which will require concerted action on european authorities bit further steps will be required to boost growth and competitiveness in a number of countries. we are in contact with a person in europe and will follow the

situation closely. inflation picked up during the early part of 2011. the search in the prices of oil and other commodities pushed overall inflation to an annual rate of more than 3% over the first half of last year. as we had expected, these factors proved transitory and inflation moderated during the second half. the committee anticipated over coming quarters inflation will run at or below the 2% level we judge most consistent with our mandate. the central tendency of forecasts for inflation in 2012 range from 1.4% to 1.8%. looking farther ahead, participants expected the subdued level of inflation to

continue this year. we will continue to monitor markets carefully. locke returned inflation expectations appear consistent with the view that inflation will remain subdued. against this backdrop of growth and moderate inflation, the committee took steps to provide additional accommodation during the second half of 2011 and early to doesn't well. these steps include the changes to the guidance including in the post meeting statements and adjustments to the holdings of treasury securities. the target range for the federal funds rate remainsm and afford guidance language in the

statement provide an indication of how long the committee expects that range to be appropriate. in august the committee clarified the language, noting conditions including low rates and subdued outlook for inflation, were likely to work exceptionally low levels for the federal funds rate through 2013. providing a longer time horizon, the statement tended to put downward pressure on longer term interest rates. at the january meeting, the committee commended the guidons further, extending the horizon over which expects conditions to board exceptionally low levels of the rate through 2014. the committee modify its policies regarding the holdings of centuries. it's a temper the committee put in place a maturity expansion

program that combines purchases of longer term treasury securities with sales of shorter-term treasury securities. the objective is to lengthen the average maturity of holdings without generating significant change in the size of the balance sheet. removing securities from the market will put downward pressure on rates and a conditions were supportive of economic growth than they otherwise would have been. to help support conditions in mortgage markets, the committee decided in september to reinvest principle it received rather than continuing to invest those securities as had been the practice since august, 2010. the committee reviews the size of its holdings regularly and is prepared to adjust those holdings to promote a stronger economic recovery in the context of price stability.

before concluding i would like to say a few words about the stigma of longer run goals and strategy fomc issued in january. the statement reaffirms our commitment to our objectives given to us but congress price stability and maximum employment. its purpose is to provide additional transparency and increase the effectiveness of monetary policy. the statement does not imply a change in how the committee conducts policy. transparency is enhanced by providing more specificity our objectives. focmc judges that the rate is most consistent over the long run with its statutory mandate.

while maximum employment stands at an equal footing with price stability as an objective, the maximum level of employment in the economy is determined by non monetary factors that affect the structure of labour market. it is not feasible for any central bank to specify a fixed goal for the long run level of employment. the committee can estimate the level of maximum employment and use that estimate to informed decisions. fomc participants estimates had a central tennessee up to 6.0%. the level of maximum employment is up to to change. it can be affected by ships in structure of the comic and by a crist by shifts in the structure of the economic policy. the objectives of price stability and the climate are complementary. at present, the committee judges sustaining a stance for monetary policy is consistent with promoting both objectives.

in cases where these objectives are not complementary, the committee falls a balanced approach taking into account the magnitude of deviations and employment for levels judge to be consistent. thank you, and i am pleased to take your questions. >> thank you for your testimony. we will now begin the questioning of our witness. will the clerk put five minutes on the clock for each member. is the recovery happening as you would expect following a major financial crisis, or has

the great recession led to any permanent adjustments in either output or unemployment levels? >> normally when an economy suffers severe recession of the recovery is a comparatively strong prepared a sharp decline tends to have a stronger expansion. our economy has been hit by two unusual shocks. one is the housing boom and bust, and we know from history that housing busts tend to take some time to be offset, in particular since housing is an important part in expenses. we also had a financial crisis, and research has pointed out that historically recoveries

following financial crisis tend to be somewhat slower than they would be a pyrrhic having been hit by both of these factors, and with housing problems still being important, and as the financial conditions including stress is coming from europe are still being a drag on economic activity, we have had a slower recovery than we would have anticipated. nevertheless we have had growth since 2009 and unemployment has come down, but not as strong and the improvement is not as much as we would have liked. >> u.s. consumers are deleveraging, and fiscal policy has begun to tighten.

as we consider economic growth, should congress enact drastic spending cuts this year or would a longer time horizon make more sense economically? what sectors of the economy could provide sustainable growth long term? >> as the senator pointed at, the reserve does not make recommendations on specific fiscal policy decisions. in the broad context, let me make two points. the first is that as i have said on a number of occasions, united states is on an unsustainable to school pat looking out over the next couple

of decades. if we continue, eventually we will face fiscal and financial crisis will be bad for stability, and it is important we plan now for a long term improvement in our situation in terms of long-term sustainability. at the same time it is important we keep in mind that the recovery is not yet complete. unemployment remains high. under current law, on january 1, 2013, there will be a major shift in the fiscal position of united states, including the expiration of a number of tax cuts and other tax provisions, together with the sequestration and other provisions that together will create a very sharp shift in the fiscal stance of the federal government.

i think that we could achieve the very desirable long run fiscal consolidation and we definitely need and we need to do soon, but we can do that in a way that does not provide such a major shock to the recovery in the near term. i am sure congress will debate the details of this over the next year, and try to take into account both the need for protecting the recovery at the same time ensuring that we do achieve fiscal sustainability in the long term. the second part of your question, mr. chairman, we are seeing manufacturing and industrial production has been leading the recovery. housing is lagging. generally, it is automobiles being part of manufacturing, but it is hard to predict what sectors will have the greatest

growth in the long term. you asked me earlier about the potential growth. we did not see at this point the very severe recession has permanently affected the growth potential of the u.s. economy, although we continue to monitor productivity gains. one concern we do have is the fact that more than 40% of the unemployed who have been unemployed for six months or more, those folks are leaving the labour force or having their skills erode it, and although we have not seen sign of it yet, that situation persists for much longer, then that will reduce the human capital that is part of our great process going forward. >> i have been working with my colleagues in the senate to move forward a set of proposals to update security laws and make

it easier for startup and small businesses to raise capital, while maintaining critical investor protections. do you generally agree that these types of proposals will help create jobs and strengthen our economic recovery? >> i do not miss the specific proposals, but it is certainly true that start of companies, companies under 5 years old, create a substantial part of the jobs that are added in our economy, and if there is anything that can be done to encourage start-ups, whether it is reducing regulation or providing other kinds of assistance, congress makes all the decisions about the specifics, but again, promoting start-ups is an important correction for job creation.

in particular, the fact that start-ups business creation has been quite weak during the expansion is one of the reasons that job creation has lagged behind the usual recovery pattern. >> senator shelby. >> thank you. chairman bernanke, at our last hearing right here on the european debt crisis, i asked the federal reserve witness about the exposure of our largest banks to european financial system. the fed has yet to respond to my request for this information. will you provide the committee with this information regarding the individual exposures of our largest banks to europe? >> of course, supervisory information as a legal protection, but we will be happy to work with the committee to provide the information. >> we need to know what is going on regarding the exposure of our banks to the situation.

>> we will make sure you have the information you need to make the decisions. the sec has provided guidance to banks to provide public information on a quarterly basis about their exposures. yes, we can work with you to help understand everything you need to know to make good decisions. >> are you concerned with exposures of our largest banks to europe? >> we are concerned in the sense that we're paying a lot of attention to it. our sense is that -- including asking banks to stress their european positions in their current capital stress tests they are doing now -- our sense is that correct exposures of u.s. banks to sovereign debt in europe, particularly that eakere

limited, and is well hedged, and those hedges are pretty good hedges. the counterparties are diversified and strong. our banks are exposed to european banks and they are major trading and financial partners. they have been working hard to provide adequate hedges. it is important note that if there is a major problem in europe, there are so many to your channels where that would affect the stability of the system that i would not want to take too much comfort to that. >> would you explain to the committee and to this member, situation as far as credit defaults swaps and why they are not deemed to certain nations to trigger the action on that.

what is going on here? is this a government intervention in the market? >> no, there is a private body which makes determinations as to whether a credit event, a credit default has occurred. thus far there has been a private sector involvement, an agreement with private-sector bond holders, and there has also been an exchange of bonds by ecb and other government agencies with greece that is protections to the ecb for its creaky debt holdings. the news this morning was that those two events did not constitute a credit event. >> why did it not create the

dynamics there? why did it not? >> their view is that so far the negotiations have been voluntary. the possibility exists that the greek government has retroactively created a collection active clause which it could use in the future to force other private sector investors to take losses even if they have not agreed to this voluntary deal, and in that case the isda will look at it again. that has not occurred yet. >> i want to go into one other thing. the dodd-frank act created a new position of vice chairman for supervision, which is subject to senate confirmation. almost two years later the president still has not nominated anyone this position.

who is currently fulfilling those duties if they're being done? >> they are of course being done, and do these are distributed -- and the duties are distributed among the governors and the staff. the point person as governor to rouleau, the head of the bank's division committee. he has testified before this committee. >> do you believe that position should be nominated and filled? >> congress created the position. yes, i would like to see it filled. also like to the board filled as well. >> the balance sheet, which is approximately about $2.90 trillion. how are you going to shrink that? i know you are not going to shrink it now. do you have a plan?

i am assure you of talk about it. we have talked a little bit about it at times. that is a huge balance sheet to start shrinking. probably not a lot of time to shrink it now. i do not not -- do not have information on that. how would you do that? >> senator gore, we have provided -- senator, we have provided an exit plan on numerous occasions. we provided an agreement about how we would proceed to the committee. in the very short-term, we can both, of course, allow securities to run off. we can reduce the impact of those securities on the economy through raising the interest rate we pay on reserves to keep those reserves locked up in the fed. over the longer time, we will have to sell some of those

securities. our goal is to get back to a more normal sized balance sheet. >> thank you. >> senator dewitt. >> thank you, mr. chairman. thank you, chairman bernanke. i thought the white paper on housing was very analytical and not -- not descriptive, which is a. . also, thinking back, such an analytical paper could have been useful in 2005, 2006, or 2007 to alert policy makers that the housing market could be catastrophic. the problem is the federal reserve must display. one of the issues that was raised at is that there are

short-term programs that might in the long term produce more returns, enhanced value to the government and taxpayers. if they are not pursued, ironically, we could have even further deterioration in profitability assets. can you elaborate on that? >> certainly. senator shelby asked about the speech given by governor duke and president dudley. they do not represent official fed position. members often give their own individual views. sorry, senator reid. one point that we make is that in a typical negotiation between a bar were or a lender, a modification or other arrangement, like a short sale or other activities like reo to

rental are typically taken on a narrow economic basis, which makes sense in a free-market economy. it is important in the current situation to recognize that the problems in the housing sector, including massive numbers of foreclosures, uncertainty about house is coming on the market, neighborhoods with empty houses -- those applications for the neighborhoods, the community, and the national economy. the weaknesses in the housing market, as i mentioned earlier, are slowing the pace of recovery. from our point of view, probably the impact of our low entered rate possibly -- low interest rate. some go beyond those of the lender and the bar were.

>> -- borrower. >> we have several challenges facing us economically. one is the housing market. the other is a potential energy supplies. it seems we have much more ability to influence housing than international energy. it would be a good investment in our time to do so. a that a fair comment? >> was a goal of the white paper, it was to encourage congress to looked at these issues. one of the directions where white we could be doing something on a policy basis that could help the recovery be stronger. >> let me turn to the issue of the volcker rule, which is pending. european governments are urging that there sovran equities at

the sort of treated preferentially in the role even though under the basel rules there is the do-risk rating for sovereign debt. is that correct? >> there is a risk rating. >> the greek that's? >> the way it has been handled by the european banking authorities is to force the banks to write down their sovereign debt and that, in turn, affect the amount of capital they can claim. >> in addition, the level of capital and resulting liquidity for european banks is rather substantial relative to ours in terms of liquidity ratios. is that also accurate? >> that that is lower? no.

at the moment, there are several issues. in principle, we are agreed to the same set of rules -- the basel iii rules. there are at least two questions. one has to do with the fact that the ratio of risk to total assets is lower in europe and the united states. the question is our european supervisors in some way allowing lower risk weights been put on comparable assets? the basel committee takes this very seriously. there is a process to verify the two continents are operating properly. the other issue is the basel rules have not been implemented in europe or the united states. there is a european union directive in process which we are looking at carefully. it does not, in our view, -- is

not completely consistent with the bottle iii agreement, but it is not the final document. we want to make sure the capital rules in europe do adhere to the agreement we all signed onto. >> just a final quick. -- in the context of the vulgar rule, you are looking very closely at the differentials between the european treatment of their sovereign debt and ultimately the way the volcker rule will treat it. >> the issues that have been raised is because there is an exemption for u.s. treasuries but not for foreign sovereigns in the vulgar rule, they are being discriminated against and local role might affect the liquidity and effectiveness of their sovereign debt market. we take this very seriously. we are in close discussions with those counterparts. we will look to see if changes are needed. we will do what is necessary. >> thank you, mr. chairman. >> chairman, bernanke, i want to follow up on the volcker rule.

i read your comments yesterday that the regulators will not be ready to issue the rule by the deadline of july, which, i think, is becoming more and more self evident. i assume the reason for that is you have 17,000 comments you have to issue with regard to the reaction of other markets in the world to what we may do with that rule. we need to conduct a cost- benefit analysis. it is likely not to happen by the time we get the statutory jed rigid deadline in july. is that correct? >> yes. it is a multi-agency role as far as coordination. we are hoping to get it done as quickly and effectively as we can. >> i appreciate that. as i read the statute, there is a deadline in july for the aged 32 act, but at the agency does

not act, the rule goes into effect. the market participants are understandably, i believe, concerned about what they should do on july 21 if the agencies have not been able to coordinate effectively. the question i have for you is would it not be helpful if progress were to correct that aspect of the statute and make it clear that on july 21 we are not going to have a vulgar role go into it -- vulgar rule go into effect that does not have the fine-tuning that the agencies will try to give it. >> we do not expect people to obey a rule that does not exist. there is a two-year performance. built into the statute. it allows two years before they have to conform to the rule. we will certainly make sure they have all the time they need to

respond. i think two years will be adequate. >> thank you. i would love to shift the remainder of my questions to the topic of the question the chairman asked you about -- whether it is time for us to begin patrolling the spend out rate and congress' spending habit or if we need to continue to hold off because of the impact on the economy. you indicated that in january at we are going to see tax cuts expire and we are going to see the sequestration impact and a number of other things that will happen. i believe your answer was, soon, we need to take some action. i want to pursue that a little more. we have been having this debate in congress for a number of years. i want to go back to the bowles- simpson commission. in that report, it was

recognized there needed to be an easing into the aggressive control of spending in washington. immediately following that, we had a big debate over the $800 billion stimulus bill. the argument was made it is not time to control federal spending yet. we need another year or two before we get into serious control over spending. we have basically put another $5 trillion on the national debt between then and now, not to count the trillions of dollars that have been used to help sustain economic activity. whether we agree with them or not. we are still seeing the argument being made that it is not time, yet, for us to become aggressively engaged in controlling the spending excesses in washington, even though we have 40 cents of every dollar board today. the budget's being proposed continue that trend for the next decade.

i know you do not get heavily engaged in fiscal policy, but you have tiptoed into those waters when will it be time? i believe it is past time. when will it be time for us to start aggressively dealing with the fiscal structure of our country on the spending side of the equation? >> the fed's purchase of securities reduced the deficit because of the interest because back to the treasury. the two things are not incompatible. you can moderate the very near- term impact of the same time you make strong actions to put us on a path -- you have not taken any action. you of not passed the laws that will bring us on a glide path to sustainability over the next decade or so i think one concern there is, as i mentioned yesterday, the 10-year budget window -- they artificially

constrained things progress should be thinking about. many of the issues we face are multi-decade issues. i think you can take strong actions that would be taking place over time. i think about the early 1980's social security reform that phased in a whole bunch of things it is still happening today 30 years later. you can take those actions, locked them in. you can get the benefit of the confidence, but it would not have as big an impact as a very big shock that will occur next january 1. i think you should at balance those objectives. >> thank you. i take it you are saying we need to adopt a long-term plan to deal with this crisis. absolutely. i would just observe that at this point, budgets that are being proposed simply go in the

other direction. we still have not gotten proposals on the table here in congress to deal with that long- term plan. i personally feel it is time we get at it. >> senator menendez. >> thank you, mr. chairman. thank you, chairman bernanke, for your service. i've read your statement. obviously, creating jobs as the singular most important issue in our country for families, for our collective economy -- such a large part of our gdp as consumer demand. how would you describe -- how are the latest programs of quantitative easing and operation twist helping us get to a more robust growth and creating those opportunities? >> of course, it is very difficult to figure out exactly

how to attribute the progress we have made to monetary policy, to fiscal policy, to other sources of growth. if you look at the record -- for example, if you look back at quantitative easing to in november 2010, the concerns at the time were that it would be highly inflationary. it would hurt the dollar. it would not have much effect on growth, etc. since november 2010, we have had since then qe2 and the so-called operation twist -- jobs have been created. we have seen big gains in stock prices. improvement in credit markets. the dollar is not flat. commodity prices are not much

changed, except for oil. we are looking at about 82% inflation rate this year. -- a 2% inflation rate this year. in november 2010, we had concerns about deflationary. we have brought ourselves back to a more stable environment. i think the record is positive, again, acknowledging you cannot necessarily disentangle all the factors. obviously monetary policy cannot do it all. we need to have good policies across the board, including housing, fiscal policy, and so on. but i think looking back, i think those actions played a constructive role. >> let me go to that point you just made on the other elements -- housing being one of them. mr. dudley is the president of

the federal reserve bank in new york. in a recent speech, i talked about those borrowers under water. he said, in part, without a significant turnaround in home prices or employment, a significant portion of those mortgages underwater will default. do you agree with his analysis? >> i want to be clear -- the federal reserve does not have a position on principal reduction. it depends on your objectives. in terms of avoiding delinquency, there is a reasonable debate in the literature on reducing payments. that is one issue. in terms of issues like mobility, for example, the ability to sell your home and move elsewhere -- there are alternatives, including a short sale.

it is a complicated issue. there are circumstances where principal reduction would be constructive and cost-effective in terms of reducing default risks and improving the economy, but i do not think there is a blanket statement you can make on that. >> right now, freddie mae and fannie mac home our guarantee 60% of the mortgage market in the country. do you think there regulator at aggressiveen enough to stabilize the housing market? >> he has to make judgments about the effect of those policies on the balance sheet of whether they meet the conservatorship requirements. i would suggest that a variety of different schools to be tried. you can make a mix of different things and be experimental. the gse is doing that to a

certain extent. we see the experimental reo to rental proposal. there is a big element trying to figure out what works best for dollars and cost. fhfa and the gse's, they are trying some pains. we will see what benefits accrue from them. >> there are two ways of preserving the corpus of your interest. one is through foreclosure. the other is through looking at the whole process of refinancing and, where appropriate, the private sector will take about 20% of its portfolio on the banks. it makes sense to do reductions in principal. i worry that our whole focus seems to be preserving the

corpus through foreclosure, which at the end of the day, has a whole other mideast -- destabilizing element. "i agree with you. what i was discussing was not foreclosures -- i was talking about the best way to address the foreclosure issue. >> senator mcwherter. >> thank you, mr. chairman. we alternate between the house and the senate. this is kind of a post-game interview. i want to home and on the volcker role. there has been a lot of testimony about the economy, quantitative easing, and how that affects prices over the next day and a half. with the volcker rule -- we are just tried to make it work now. why were treasurys and mortgage-

backed securities excluded from the vulgar role in the first place? in the ker role i first place. >> it had to do with the desire to maintain the treasury market. >> we have had an outcry from foreign governments and middle american companies that realised they will not have the debt-to- liquidity. you are a renowned economist. is it something that is good for our country to lose liquidity with those other instruments, or would we be better off with treasurys and mortgage-backed securities on the same basis and may be moving them into the volcker arrangement? >> there is certainly a trade

off. there will be some marginal effect from volcker on markets. does the market make -- need an exemption? we will try to clarify the distinction. >> do you think market making is a good thing for our country? by virtue of that statement, does that drive you? >> you have to draw that line in a way that does not inhibit good market-making. >> i have talked with some of the advocates for the volcker rule. we try to come up with a one sentence solution to allow market making to take place. the people we talked to want to see the volcker rule used as a way to get glass-steagall through the back door. i think you would believe that to not be a good thing for our country, at least as it relates

to market making. is that correct? >> i am have not been an abbott -- i have not been an advocate of glass-steagall. commercial and investment banking was not particularly helpful. investment banks were a big source of the problem by themselves separately. there are trade-offs. the goal of the ballgirl is to reduce risk taking by institutions -- the goal of the volcker rule. when you have a rule that people described like in many ways, pornography, in other words, you know it when you see it. would it be helpful if congress clarify the fact that market making is not intended to be overturned by virtue of the volcker rule, that market making is a valid an appropriate

process for these regulated entities to be involved in. do you think that might help? you have had all these comments. you have all these regulators trying to come to a conclusion being pushed by various constituencies in congress. would it be helpful to clarify that as congress would do believe that market making should not be negatively impacted by the a paul volcker rule? >> the federal reserve pushed for these exemptions offs and the statute is clear that market-making -- market-making is exempt and we want to make that operational. i understand your intent that market making in hedging should be exclusive from proprietary trading. >> i think we are generally speaking on the same page as it relates to the volcker rule and we don't wanted to do damage to the death of liquidity unnecessarily for lending activities in this country.

is that correct? >> that is correct. >> it is probably a legitimate concern for other sovereign governments to say this is incredibly unfair for the largest economy in the world to place a tremendous bias of liquidity of treasurys and mortgage-backed securities, but not over on sovereign debt. would you agree that is a little bit of a problem? >> we are certainly in conversations with our partners. one difference is that the primary markets for japanese debt are in japan and not broadly affected by the volcker rule. i agree that we want to make sure we are not doing unnecessary damage to those markets. >> to do you agree that the zero waiting that we place on sovereign debt, especially in this world and in light of the fact that we are on our own

worst enemy in this country and we still have not been able to deal with our longer-term issues, with the basel rules in place, should there be zero risk weighting for treasuries or any other kind of sovereign debt? we have seen some really big risks out there. >> none of those securities is completely without risk, that is true. in the case of non-u.s. -- we have approached it in various ways. as i mentioned before, the europeans have asked the banks to write down the value of that debt. in the united states, we have been making banks -- we are not just relying on the capital ratio, we are making a stew stress test and so want to make sure they are safe and sound. we are not ignoring that by any means. in the case of u.s. treasuries,

our assumption is that the biggest source of risk is interest-rate risk as opposed to default risk. i think the whole financial system would be an enormous struggle. we do ask banks to stress test their interest-rate risk, including the risk of holdings of treasurys and municipalities and so on. >> i know you have received some criticism over the housing white paper. i know we had a brief conversation about hist. -- about it. i hope that in your core area, and that has been pretty active in giving advice outside their core area. i would love to see a white paper on the effect of financial regulation that we just passed on our country and i don't know if that would be forthcoming, but i suggest it would be very useful to us as we try to work

through these details. thank you for your testimony. >> chairman bernanke, this is a question which is a follow-up on your discussion with chairman johnson of senator crapo. inouye testimony, you note -- in your testimony, you know there has been some modestly encouraging data recently, including slightly better performance in the labor market, improved consumer sentiment, and some increases in manufacturing. but the signs of economic recovery are not necessarily reflected get in the experiences of all workers and families in the community. putting aside their repression in the eurozone, pa possible setbacks concern you the most

with respect to risks in our economic recovery? for instance, cutting political investments too quickly, would it send us back into a slowdown? >> let me just say first that one of the points i talked about in my remarks was that there still is a little bit of a contradiction between the improvement in the labor market and the speed of the overall recovery in terms of growth, in particular i mentioned that income had been flat and for consumers in 2011, the revised data from yesterday said it was a little better than flat, but still less than 1%. you still have consumers reject spending growing relatively weekly. you have the fiscal issues hanging over our heads.

in order to make this a sustainable, strong recover, we need to have both declines in unemployment and strong growth and demand in production. that is something we have to watch very quickly. i do have to mention europe. i think that is imported. the other is oil prices. we have seen a number of movements up and down in energy prices. to some extent, a little bit of the movement in commodity prices is essentially inevitable because of the economy is growing, the demand for commodities goes up. when you have shocks to

commodity prices are rising from geopolitical events, those are unambiguously negative and are bad for households and the broader economy. housing remains a difficult area. we were hoping for price stabilization. we think once people have a sense that the housing market has stabilized, they will be much more willing to buy. banks will be more willing to lend. right now there is uncertainty about where the housing market is going. i guess, finally i would mention fiscal policy with -- which both in the short term in terms of where fiscal policy will go over the next year and in the long term in terms of whether congress and the administration will work together to have a sustainable path, i think both of those things are creating uncertainty and concern that will pose some risks to the economy. there are a number of different things. overall, there has been some good news. that is welcome. >> thank you for that response. as you know, i am most concerned with the well-being of consumers.

in the current economic climate, consumers are confronted with difficult financial decisions. this is the case in hawaii where many homeowners face possible foreclosure. the average credit card debt of a resident is the second highest in the country. we know that by saving, individuals can protect themselves during an economic downturn. we also know that our slow economic recovery is partially due to low consumption of consumer spending. my question relates to the intersection of these two factors. how can we continue our efforts to promote economic recovery?

at the same time, encourage responsible consumer behavior and financial decision making? >> that is a very good question. part of the problem now is that the total demand in the economy is not adequate to fully utilize the resources of the economy. that is why we talked about the need for greater consumer spending and greater investment and so on. of course, we want consumers to be responsible as well. they have in fact raised spending rates and reduce leverage. all that is positive.

the man comes from places other than consumer spending. -- demand comes from places other than consumer spending. it can come from exports. those are areas where higher investment creates more capital and potential growth in the future. it reduces our trade deficit. it makes us more competitive internationally. those are alternative to consumer spending to provide growth. there is also a bit of a paradox that consumer spending collectively if it generates more hiring and wage income can actually in the end lead to sounder consumer finances than the alternative. if the economy is growing strongly and income is being created, consumers will actually be better off. confidence is really important. if people are confident about their income prospects, it can be a self fulfilling prophecy as they go out and become more confident in their purchasing habits. of course, this all relates as

you have often mentioned to financial literacy and the ability to make good decisions. we want people to make decisions appropriate for their own needs and stage and lifestyle, for their retirement and those things. that remains an important goal even as we worry about trying to get the economy back to full employment. >> thank you very much, mr. chairman. >> you mentioned several times the before us to have a plan for sustainable fiscal policy. would a plan that balanced our federal budget within a 10-year window -- would that be what you consider a reasonable transition towards good fiscal policy? >> i would go for -- at a minimum i would aim at the next 10 or 15 years eliminating the primary deficit.

that is everything except interest payments. wants to eliminate the primary deficit so current revenues are equal, that means the ratio of debt to gdp will stabilize. if you go beyond that, you start to bring the debt to gdp ratio down. the other thing i would say as i mentioned earlier, many of the things that are going to be problems are kicking in after 10 years. i hope congress will take a longer-term horizon than that. >> in my conversations with some of your governors and some of the central bankers around the world, there seems to be a broad consensus that there is not the political will, here, europe, or many places to get control of fiscal policy. much of our policy is driven by

trying to clean up the miss that policy makers may. you may not want to comment on that, but quantitative easing, for instance, is dealing with the tremendous debt we have made as policy makers. what we see in europe today dealing with a debt from a monetary policy rather than fiscal policy. my concern now -- i know you meet with central bankers all over the world regularly. as i see what appears to be a coordinated increase in money supply here, europe, and other places. it cannot be formal, but there appears to be an effort to keep relative values of currencies the same as we increase our monetary supply. i would just love to have some insight be on the individual

policies here. is it released within -- is it true a lot of monetary policy is driven by irresponsible fiscal policy from policy makers? is there an effort for central banks around the world to work together to deal with that? >> i would say no to both questions. our monetary policy is aimed at our dual mandate. we're trying to set monetary policy at a setting that will help the economy recover in the context of price stability. i think it is interesting other countries are following our basic approach. it is because they face similar situations. weak recoveries, low inflation, and the fact that interest rates are close to zero. some of these quantitative

easing tight policies are the main alternative wants to get interest rates close to zero. this is not an attempt to cover up or clean up fiscal policy. on the other hand, the concerns that people express spoke about the united states and other countries about the political will and the ability of the political system to deliver better results over long-term, i think that is an issue a lot of people are concerned about. i have noted in previous occasions the reason s&p downgraded the u.s. treasury's last august was not because of the size of the data because they took the view that our political system was not making a long-term fiscal plans. i hope we can prove them wrong. this january 1 event, if so many things left unchanged, i hope that will be a trigger. to force congress to set, how are we going to solve this

problem? -- trigger point to force congress to say, how are we going to solve this problem. >> my concern is, i really do believe we would not have 16 trillion dollars in debt if we had not been irresponsible as policy makers over many years. i am not blaming them on any president or party, but it is clearly a problem. as it has been pointed out by "the wall street journal "today and other magazines, a loose monetary policy is compounding the potential problems in the future. i think as senator shelby talked about, the need for

transparency and the need to understand where we are heading with this is pretty important to us as policy makers. we are on an unsustainable path. it hurts me to hear you say in the 10-20 years we need to bring it under control when the analysis i have seen of worldwide available credit suggests a five-year window may be tough for us on our current pace as far as borrowing the money. we seem to have a compound in growing problem and not a sense of urgency. it seems to be potentially making that much worse. i will let you commented that will yield back. >> i would only say that i do

not mean action should not be taken until 10-20 years. the plan should be a long-term plan. looking at only 2013 will not be helpful. you need to look at the whole horizon. >> thank you, mr. chairman. thank you for being here today. i wanted to focus my questions on the economy since you actually know what you're talking about. before i do that i want to go back to an answer he made earlier on interest rates. you said you thought the risk of default was not a serious one. the risky are worried about is interest-rate risk for our financial institutions and the economy. can you talk a little bit more about that? what the effects would be of a more normalized interest rate than the one we have today. >> both short-term and long- term interest rates are quite

low. our current expectation as we said in our state and is the short-term rate will stay low for a good bit more time. eventually at some point, the economy will strengthen. inflation may begin to rise. the fed will have to begin to raise short-term interest rates. at the same time, stronger economic conditions here and globally will cause longer-term rates to begin to rise. that is a good thing. that is a healthy thing to see as a economy returns to normal. depending on how your portfolio is structured, you could have the risk of losing money on holdings, bonds. we just want to make sure banks understand their risk. we want to make sure they are

well protected and hedged against whatever course interest rates might take in the future. eventually they will begin to rise. we just do not know when. >> the center made the point earlier that we have seen some economic growth, but it has not hit home in many ways. i have a chart -- i will carve it in the air for you. the top line is gdp growth. what we see is that our gdp is higher than it was before we went into the recession. that surprises a lot of people when they hear that. productivity has risen mightily over the same period of time because of our response to competition from abroad and the use of technology. then the recession itself better of the productivity index straight up. firms are trying to get by with your people. we are producing the economic

outlook with 24 million people that are either unemployed or underemployed in the economy. we are stuck with a gap of economic output and productivity here and wages and jobs here. can you help me think about the kinds of things that would begin to lift the medium income curve in the right direction -- the job curve in the right direction? i encourage you to think broadly about that -- education or immigration -- whatever you think will help. >> unlike the political stuff we are all talking about in washington that does not make sense to people at home, that is the issue -- >> let's not belittle the impact of getting back to full employment. that would be very helpful.

there is a couple of interesting things. one is the profit share of gdp is unusually high. it is a bit of a puzzle. it may have to do with globalization or the fact that a lot of profits are earned overseas rather than domestically and so on. i think more generally, there is a whole raft of issues associated with globalization including trade competition and the fact that low-skilled workers are effectively competing around the world. advance in new technology provides a lot of benefits to people with greater education and training. it creates discrepancies between them and people with less training and education. from that, there are not a lot of good answers, but certainly

the most basic thing is training and skills. those are highly rewarded in our society still. the low-skilled workers are effectively competing with low- skilled workers globally. it is very difficult for them to earn high incomes. >> i am out of time. i realize that. the worst that unemployment not for people with a college degree was 4.5%. there is a lot can learn from that. >> thank you, mr. chairman, for being here. i am concerned about some of the negatives that could clearly grow over time about the zero interest-rate policy. what would you consider the list of present or potential negatives? how do you go about monitoring

those 2 always determine whether this continues to make sense in your mind? >> a number of issues have been raised. when that is often raised is the return to savers. a low interest-rate penalizes savers. we take that into account in our discussions. as i mentioned yesterday, of total household wealth, less than 10% is in fixed income instruments like cds or bonds or so on. most wealth is and other forms like equities, small-business ownership, real estate, etc.. our efforts to strengthen the economy will increase the

returns and value of those assets. our activities are raising household wealth overall even if they are reducing the interest rates. of course, keeping inflation low also helps in that respect. the second issue we hear about his pension and insurance. that low interest rates increase contributions that those companies have to make. again, we have had many conversations with those folks about these issues. i would say it is a serious issue and one would let -- it is a serious issue and what we would look at. these pension contributions are significant, but not massive. on the other side of the balance sheet, companies have to invest in the economy. once again, a stronger economy. -- produces higher returns. the third issue that is very tricky has to deal with creating a financial bubble.

people have different views about that. our view is basically that the first line of defense against bubbles should be what is called macro potential supervision. there should be supervisory approaches looking at what happens in the system and make sure protections are a strong as possible. we have greatly upgraded our ability to monitor the financial system since the crisis. we're both trying to identify potential problems and making sure the institutions are strong so if there is a problem, they will be able to withstand it. if those things do not seem to be working, we prepare to take that into account in monetary policy. those are the issues, and we are aware of them. >> one thing that might of been first on my list is commodity prices. a weak dollar pushing up

commodity prices. of course now, the most obvious example is gasoline prices. briefly, how would you analyze that and what does that start becoming such a negative that you rethink this? >> i think two was low interest- rate policies realistically would affect commodity prices would be through weakening the dollar. the dollar has been pretty stable. it has not moved much since november 2010 when we introduced qe2. the second is by creating growth here and internationally. it increases demand for commodities and raises prices. if you want to have a growing economy. those two things have not been a big problem. i think particularly, if you look at commodities, the one commodity that has been particularly troublesome has been oil. currently, it is quite obvious there are a number of factors affecting the supply of oil including concerns about iran,

supply issues in africa and so on that are contributing to the increase. >> the most of the quantitative easing announcements have been more or less coincided with increases in oil prices. are you saying that is largely a coincidence or not? >> that is now entirely a coincidence. first of all, if you look over long periods, it is not quite as close a correlation as you might think. i think part of the reason again that there is a coincidence is because of the extent that monetary policy is structured in a way to increase growth expectations. that feeds into commodity prices through the demand channel. that is one like that i do agree exists. >> if i can just wrap up, at what point particularly with regard to oil -- at one point

with that factor driving up prices -- at what point is driving up prices that you would pause in terms of this 20140 interest-rate policy? >> will always keep looking at it. our analysis -- our analysis suggests there a whole range of asset prices, through increased consumption and investment spending and so on our way is reasonable estimates on the effects of commodity prices. again, i think the reason we have seen the strong movements has more to do with international situations than a u.s. monetary policy. obviously, it is a negative and something we want to keep monitoring. >> thank you, mr. chairman. >> i would like to thank you for your testimony today. there is a vote going on.

it requires my attention. i now turn over the gavel to senator schumer. >> i would like to recognize senator schumer to ask five minutes of questions. thank you, mr. chairman. the first question is about the highway bill -- the transportation bill that is on the floor. it will create according to its sponsors -- 3 or save 2 million jobs. it has broad bipartisan support. they estimate for every billion dollars of federal investment in highways creates 36,000 jobs. what impact would pass in the long term transportation reauthorization legislation have on the pace of economic growth? >> i do not know enough about the details of the bill to give you an estimate. i would like to make one estimation.

-- i would like to make one observation. if you think about long-term infrastructure investments, you have to think about whether these are good investments in terms of the returns. president eisenhower's investment in the interstate system produced tremendous dividends in terms of reduced transportation costs and integration of our economy. i would urge your -- i know you are doing this. as you approve projects, you want to do the ones that will be the most productive. >> that goes to the quality of the project. at this point in time, that kind of stimulus in a sense would serve the economy well and would be needed. >> there are different ways -- >> assuming it would be spent well. >> there are different ways to provide stimulus. infrastructure, if it is well designed and has a good return is often a good approach.

you understand that i do not want to endorse -- >> endorse a bill. i did not ask you that. you made the caveat that it might not be a good project. i am just saying when you said the economy is moving forward at a slow pace, not having the -- taking away infrastructure money might hurt the economy. adding infrastructure money would help the economy. you want to do it as well as possible. is that a fair recapitulation? >> yes. >> say no more. those alternatives are not -- this is a yes or no situation for us now. money market funds. we all know the dark days of the fall of 2008. the panic that ensued when a large money market fund broke the buck. there was a run on the funds. the fec instituted some reforms to address the problems that led to run in 2008. however, they have made it

clear they believe more should be done. and recent reports they discussed a few options including a requirement that would lock up a portion of investors' money and proposal to require funds to abandon the stable $1 a share net asset value. the proposals have the potential to change the nature of the product. some say it would drive it out of existence. obviously, they play an important role in short-term financing of many different types of businesses. what are the risks to the economy and financial system if we were to fundamentally alter the money market funds, what do you think of the two different proposals made? if investors have to keep 3% or a certain percent and cannot let our right away, it is not worth the investment to them anymore. it is not worth investing in a

money-market fund for them anymore. >> first as you pointed out, the fec has already done some constructive things in terms of improved liquidity requirements. i think the federal reserve in general, and i would have to agree, there are still some risks in the money market mutual funds. in particular, they still could be subject to runs. one of the implications of dodd- frank is some of the tools that we use in 2008 to arrest the run on the funds are no longer available. the treasury can no longer provide the insurance they provided. the fed's ability to lead to money market mutual funds is greatly restricted because of the fact that we would have to take a hair cut on their assets. that is not going to work with their economics.

support the attempts to look at alternatives. you mentioned some different things. i believe their ideas to put out a number of alternative strategies. one would be to go away from the biggest net asset value approach. i think that the industry will reject that categorically. the question is, what else can be done? what approach would be essentially to create more capital. they have limited this point in driveways overtime to build up the capital base. that is one possible approach. a separate approach would be something that involves not allowing the investors to draw 100 percent done immediately. if you think about that, what that really does is that it makes it unattractive to be the

first person to withdraw your money, and therefore it reduces the risk of runs considerably. as an investor protection benefit which is that if you are a slow investor and not monitoring the situation moment by moment and you are the last guy to take your money up, you are still protected because there is a 3% 4 whatever -- >> i have heard from some investors and some funds that given the low margin that money- market funds pay, it would just ended the business, more or less. i have heard from investors they would not put money in if they knew they had to keep money in there. >> is a difficult time because the interest rates are very low and therefore their attractiveness is less. i think you have to have some kind of discussion here, because part of the reason that investors invest in money-market mutual funds is because they think they are 100% safe and

there is no way to lose money, and that is not true. we have to make sure that investors are aware and take whatever actions are necessary to protect their investment. >> you think they play a useful role in the economy and they should generally try to keep them going? >> they are a useful source of short run money, and again, please don't over read it this, but europe doesn't have any, and they have a potential system. they are in great shape. i envision that money-market mutual funds will be part of the theater of the u.s. financial system. >> thank you mr. chairman, i appreciate it. there are no more questions. thank you, mr. chairman. on behalf -- i will adjourn here.

host: caller: fifes reject >> [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> in a few moments, one of the co-founders of ben & jerry's ice cream on his support of the occupy wall street movement. in a half-hour, president obama speaks to a fund raiser in new york city. after that, a senate foreign relations committee hearing on the political unrest in syria. later, we will rielle certification ben bernanke testimony on the economy. -- we will we ever secretary ben bernanke's testimony. for >> tomorrow morning, our guest include republican senator james inhofe asked. some states or reject

considering requiring drug tests for welfare recipients. you can call in with questions .bout that fo we will discuss state and local government finances with tracy gordon from the brookings institution. "washington journal" is live on c-span every day at 7:00 a.m. eastern for >> next, a look good by several business owners have made plans to help fund the occupied wall street movement. this is a half hour. host: joining us from our new york studer is the co-founder of ben & jerry's and a political activist. mr. ben cohen. what is your most recent political project that you are getting involved with? guest: i am working with the movement resource group.org.

that organization is raising money to help support a lot of the work that's being done in the occupied and 99% movement around the country. host: why are you supporting those movements? guest: i have been working for economic and social justice for decades. it seems to me that the thing that has been missing in the struggle is a massive. massive. i think that is what occupy and the 99% movement have the potential to become. -- what is missing is the eight massive grass-roots effort. host: what is your goal with the money you are donating to this campaign? guest: to keep the campaign going, to support it at this transitional time as it is

transitioning from spontaneous occupations in parks to a more strategic campaign that is more coordinated around the country and that starts to to startssom pote -- us to talk about some potential solutions to the problem of economic disparity. host: what is one solution that you would like to see a? guest: there are several that are being discussed. one of them is the idea of a constitutional amendment that would finally get money out of politics and recent corporate personhood. there are others that are very focused on making college education accessible to people

so that students are not saddled with overwhelming debt in order to get a college education. and then there is the home foreclosure crisis and the idea of getting banks to renegotiate mortgages, to restructure them so that people can stay in their homes. host: joining us from our new york studio is ben cohen, political activist and co- founder of the ben & jerry's ice-cream chain. 202 is the area code if you would like to speak with him. you can also contact uscia e- mail -- contact us via e-mail and twitter. has the occupy movement been successful in what they are trying to do right now? guest: the occupy movement has

been incredibly successful in finally breaking through and getting america to understand that essentially our country is being run more and more for the benefit of the wealthiest and the corporations. it has now become fairly common knowledge that the top 1% of the population owns 40% of the well. there is something that is wrong with that. the problem is the direction, that it's getting worse. host: first call comes from st. louis. dee on our democrat line. caller: chocolate fudge brownie is a wonderful invention. thank you very much. and i would also like to point out that they just announced an

article on "politico" of republicans salivating over jeb bush possibly running for president. last year they talk about the legacy of. of politicians. they had the discussion on the the legacies of families of politicians in this country. all of them seemed to be extremely well the and have some economic influence or spin in the game and have children in politics. my encouragement for occupy wall street is the level of social equality that is required is can we please get a president who is not a family legacy of millionaires, so that we can actually get somebody in there?

clinton and president obama were the first two in my lifetime. but that is the crux of it. we have too many people with interest -- a financial interest in our politics. host: ben cohen. guest: that's absolutely correct. when you look at congress, i believe 50% of our congress people are millionairess. that is not representative. so i agree with the caller wholeheartedly. and, personally, i believe that public campaign financing would help to eliminate that influence of money in politics. host: jeffery tweets --

what do you say to people who say you benefited from this capitalist system and now are you trying to take it down? guest: you know, it always amazes me that the assumption is that people are always going to operate in their own narrow self-interest. my concerns before i ended up with a bunch of money was about equality and economic justice. and my concerns continue to be about that. they of not changed. i try to use my time, myself, and my money to try to work for more economic and social justice in the world.

host: ben & jerry's social mission goals as a corporation -- since you sold the company about 10 years or so ago, have you continued those goals? guest: definitely have. in terms of some aspects of being owned by unilever, the and ice cream is available now all over the globe. when we decide to source are ingredients in a fair trade manner that supports farmers in the developing world and pays them a decent wage for their products, it has a whole lot more effect.

host: jim tweets -- guest: well. i still have very high hopes for the occupy movement. there was a time of hibernation in the winter, but there is a tremendous amount of plans for the spring. i am personally very supportive of the effort to get a national outdoor-facing website up so people are able to engage with the occupy movement throughout the country. and i think the best is yet to come. host: next call comes from hairy in pittsburgh on the republican line.

caller: i am glad to see somebody with money is funding this and putting their name on it. now we have someone to go after and hold their feet to the fire for what they are doing here. i am sure if any litigation now, you could be front and center of it. so thanks for everything you are doing. goodbye. guest: i think we have been very clear, and if you visit our web site, you will see that we are adamantly opposed to violence. i don't believe -- really, there has been some property destruction in terms of some broken windows at the fringes of the movement, but that is certainly not a part of the

movement that i personally support, and it is not a way to accomplish the objectives of the movement. we need to represent the 99% of americans and they do not believe in violence. host: in november there was a gallup poll about occupied and its goals. there was some support for its, but people were confused about what its goals were. do you think the movement as a whole has been clear in spelling out what its goals are? guest: actually, yes. the movement is very clear that they want a world that works for the 99% sun instead of just for the 1%. i think one of the reasons why there has not been a demand or a

few demands is because what is needed is a total change in terms of outlook and perspective. but along the way to that changing outlook, occupy has supported the effort to get a constitutional amendment to finally get money out of politics, to state that corporations are not people. they have been very supportive and very active in terms of keeping people in their homes and ending at the home foreclosure crisis, and have been very successful in getting banks to renegotiate mortgages and restructure them so that people can stay in their homes. so there is a whole bunch of things that are needed. i would say we need to

reinstall the separation between banks and investment houses in terms of the glass-steagall act , but occupy is saying it is not just one, two, three, or four things. it is a whole bunch of things that need change. host: what is your get the bill out campaign? guest: is about getting the bill out of politics and passing a constitutional amendment that will do that. i have not been able to find anybody on either side of the aisle who is saying that we should keep the current system, which is essentially a legal bribery. i think there is tremendous support throughout the country, and i think that we need to start holding politicians speak

to the fire. in vermont, i believe there has been a resolution that is either passed or proposed to pass a constitutional amendment. i think we ought to be occupying our politicians' offices until they vote for that constitutional amendment. host: this is week came in for you, mr. cohen. guest: absolutely not. ben & jerry's has never supported a political candidate and i don't believe they ever will. host: what is your enthusiasm level about the 2012 presidential election? guest: my enthusiasm is about changing politics as usual.

my enthusiasm is about using this presidential election season to start addressing some of the major issues in our country that are non-partisan, and they are non-partisan because neither party is addressing them. so that is where my enthusiasm comes from. i think is still a tremendous opportunity to finally talk about money in politics and maybe even start talking about starting to raise the minimum wage. host: are you enthusiastic about the reelection of president obama? guest: i believe president obama is the best alternative we have got, and that is what i think. host: thomas on the independent lines from wisconsin. caller: good morning.

i applaud you for your efforts in this country. c-span, my tv does not change very far from you guys. i just love you. to stay with the subject, in my personal opinion, i think the biggest failure of occupy it is the lack of a coherent plan, which has invited ridicule from the right. if i could make one suggestion, mr. cohen, if you can pass this on to the powers that be within occupy, perhaps a reawakening of the single tax theories would be an excellent base which to start from. i don't know if you are familiar with henry george, but he still has probably the most widely purchased book on economics ever written. it was 100 years ago that he put it out, but anyway, thank you

guys for everything you do. i tried to get in earlier. veterans don't need another parade. i am a vietnam veteran, and that is the last thing we need. we need to just not be used and thrown away when we get back home. >> that was a reference to our earlier segment. but if you want to address what he had to say it first. guest: i am interested in reading the book. i have not read it yet. occupy started off as a spontaneous movement, and then it spread spontaneously throughout the country. there never was a plan and strategy, and i think now, some of that planning and strategy is starting to be done and some of the national coordination is starting to be worked on. so i think we are moving in the right direction. host: will is a democrat in

baltimore. go ahead. caller: let me begin by saying is refreshing to see someone of your wealth speak on behalf of the little man. i will go and taster ice-cream a little more now that i know this. i wanted to say that my concern with the occupy movement, which i do support it, but i think the negative image that we see sometimes on the tv screen, being subjected to brutality, and a lot of us are looking at it and saying day in and day out, they are staying there, and most responsible people have to go back to their jobs if they have them. what is left or maybe some people out there having a good time. i would like your comment on that. one more quick point, i think president obama made a strategic error in his first term by going

after health care reform instead of going after tax reform. guest: i agree very strongly that the occupy movement needs to start looking more like the 99% of the population. one of the big problems is that there was no way for the millions of people around the country that supports the occupied movement to engage with it and get involved with it. that is the idea of this website that i have been trying to get out, and an e-mail system that will allow people to communicate back and forth and to get involved with it. involved with it. i agree with the caller